Filed Under:Agent Broker, Agency Management

Thinking of an M&A? Answer These 2 Questions First

By Rick Dennen, President and CEO, Oak Street Funding

If you apply the notion of a chain being only as strong as its weakest link to an insurance agency, companies embarking on mergers or acquisitions would be wise to invest time and money to uncover weak links before a sale is finalized. Although many agency owners start an M&A process focused on financials, overlooking or minimizing hidden vulnerabilities can be a costly mistake.

Can we retain and grow the existing level of business?

Retention comes down to three key factors: contracts, customers and service. In addition to carefully reviewing all significant contracts, buyers should contact carriers to ensure contracts and rates will remain intact and to determine if they can be merged with existing contracts for the same or better rates. Attorneys can provide critical expertise in evaluating and determining enforceability of all employee-related contracts, non-compete and non-solicitation agreements, leases, vendor relationships and any other contracts.

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