Broker M&A: Uncovering Hidden LiabilitiesThe continuing need for new sources ofincome, market clout and alternative production capacity inuncertain times has fueled the search by large and small brokersalike for potential merger and acquisition candidates. In pursuitof ever-increasing revenues, many brokerage executives have becomeaccustomed to an analysis of potential acquisitions by focusingupon brokerage valuations, market clout and increasedcapacities.

Such clearly valid criteria aside, many agency executivesnonetheless tend to ignore certain vital aspects of brokerageunification, such as hidden legal liabilities, potential culturaldissonance in the combined entities and the inherent instability ofbrokerage business valuations.

The ability to take a sharper view of the less obvious factorsto be considered in the process of acquiring a business may wellconstitute the difference between a smooth transition and a rocky,exhausting travail. As a result, careful consideration of allaspects of how a brokerage will be affected by an acquisition iscrucial.

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