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Top things to consider during an insurance agency sale, acquisition, or merger

Independent insurance agencies have likely noticed the increase in agency mergers and acquisitions in recent years, with a notable 40% of independent agency owners foreseeing a change in ownership within the next 5 years according to Big I’s 2022 Agency Universe study.

The decision to sell or merge an agency is a momentous one for both the buyer and the seller. It involves careful consideration of many crucial factors to guarantee a seamless process and to preserve the agency’s value. HawkSoft recently discussed this topic with a panel of guests including customers Scott Howell of iProtect Insurance and Colleen Wood of Montana Farmers Union, as well as HawkSoft employees Tiffany and Noemi, who aid agencies in these transitions as part of the Customer Success team. We’d like to share some of their top takeaways of important items to consider during the merger/acquisition (M/A) process.

Things to consider during a merger/acquisition

Agencies often sign purchasing agreements without considering all the future ramifications for the agency, including agency data, technology, relationships with carriers and other parties, and creating a smooth transition for employees. Here are some important areas to consider before finalizing an M/A.

Non-cash benefits

When selling an agency, it’s tempting for sellers to simply choose the buyer offering the highest price for the agency. However, there are non-cash benefits that should be considered too. A PE-backed firm may offer the highest price, for example, but an internal buyer may be able to offer assets that are even more valuable to the seller, like internal agency knowledge and relationships and the influence to retain the current agency staff.

In addition to the sale price, buyers may also offer other enticing benefits such as profit sharing, stock options, or long-term growth incentives. These additional perks could potentially outweigh a higher immediate sale price. Sellers should also take into account the role they desire to have at the agency after the sale. “Think about your future at the agency,” Scott recommended. “Do you want to continue working there for a certain number of years? Do you want to have a part-time or consultant role? Make sure that’s part of the contract, or the buyer has no obligation to respect it.”

Make sure you understand what things are most important to you as a buyer or seller, and that you’re choosing the buyer/seller that offers the most value in those areas—not simply the highest sale price. “Ask around about the buyer you’re considering,” Scott encouraged agencies, “or even ask the buyer if they can get you in contact with other agencies they’ve bought. Ask them to tell you the good, the bad, and the ugly.” Colleen agreed that buyers should do the same: “look at the previous owner and how they did business, and look at the customers they have.”

Agency technology

It’s incredibly important to understand how the M/A will impact the technology being used at the purchased agency. Consider these questions regarding the purchased agency’s technology stack:

  • What technology does the purchased agency use?
    • What things are different from what the acquiring agency uses?
    • Which tools will be kept, added, or lost?
  • Will users needed to be added to or removed from any tools?
    • What is the associated cost?
  • Are there termination fees with any tools being removed?
    • What contracts are in place?

Disruptions to familiar systems, processes, and tools can send shockwaves through your agency and hinder staff productivity if not properly managed and prepared for in advance. Here are a few critical technological components to carefully consider during a merger or acquisition.

Agency management system

Likely the most substantial and complex piece of technology at an agency is the agency management system. Here are some important questions to consider if the purchased agency will be moving to a new management system:

  • Is the buyer incentivizing the purchased agency to change to a new system?
  • How will employees be trained on the new system?
  • What will the data conversion to the new system look like?
    • What data will transfer?
    • What data cleanup or standardization will be needed?
    • What is the associated downtime and cost?
  • Who owns the agency data?
    • Is the owner stipulated in the contract?
    • Are there fees associated with obtaining ownership?
  • How will the seller maintain a copy of data for E&O purposes?
    • What is the cost and who is responsible for paying it?

Noemi emphasized the importance of understanding which party is responsible for any costs associated with changing or merging management systems, which can be substantial and may not be outlined in the sale contract. “If you’re changing systems,” Tiffany added, “contact the new system and ask them what the conversion process is and how long it will take. Every single vendor brings different data over and has a different process.”

Colleen mentioned that her agency recently moved to HawkSoft as part of an M/A. “I was very nervous about how much data would come over to HawkSoft,” she said, “but every bit of it transferred over. We were on one system one day, and two days later we were on HawkSoft. I thought I would be getting back into the previous system every day, but I’ve only had to once or twice. It’s been fantastic. When we went through this with other systems, we would only get the policy downloads through Ivans, and had to manually re-input the rest.”

Even if the purchased agency is using the same system as the purchasing agency, the two databases will likely need to be linked or merged, and it’s important to understand the work and cost this will entail. See our Mergers & Acquisitions checklist for a list of specific management system settings that may be affected by an agency M/A.

Additional agency technology

There are a number of other software tools to consider during an M/A. While transferring data may not be an issue since it likely comes either through the management system or directly from carriers, you will still need to coordinate whether there will be a change in technology or who owns and handles the account.

  • Ivans account
  • Comparative rater
  • E-signature tool
  • VoIP/phone system
  • Email marketing tool
  • Other integrations: review management, analytics, pipeline management, etc.
  • Office licenses & subscriptions: Microsoft Office, Adobe, etc.

Carrier agreements

Another major thing to consider is how the M/A affects the carrier appointments, contracts, or terms of the purchased agency. Will the agency retain its original appointments and thresholds and receive the same commission and bonuses? Tiffany pointed out that appointments are sometimes tied to the agency owner, and will not necessarily pass to the new owner.

On the other hand, additional carriers or better terms could be available through the acquiring agency. Take a close look at your carrier contracts to determine how they will be affected. “Talk to carriers before the sale and get in writing what will happen to the contract or appointment,” Scott recommended. “My advice is ‘plain speak is best understood’.”

Buildings, offices, & maintenance

The M/A contract stipulates what will happen to the building or office space of the acquiring agency, whether it is changing locations or simply changing ownership. However, there are many associated items that may not be clearly spelled out, from the hardware technology, furniture, and other physical assets within the office to any contracts associated to building maintenance (security, cleaning, landscaping, etc.).

“Everything down to who’s washing the windows has to be thought about,” Tiffany said. “They may seem small, but they can quickly bring the office to a halt if they’re not taken care of.” Create a list of all contracts associated with the office space and make sure each one is transferred to the responsible party if needed.


How the transition is handled with the employees can be one of the biggest factors in determining the success of the M/A. Scott shared that his agency has gained experienced employees who left their prior agencies due to negative M/A experiences.

Colleen told the panel that when she bought an agency in the past, the selling agency didn’t inform the employees, leaving her with the unexpected duty. “I ended up being able to keep all the employees,” she said, “which was invaluable because they’re the ones with the relationship with the customers.” Noemi agreed that “it’s important to make sure employees are involved in the transition process as early as possible so they have the tools and technology they need to be successful.”

The panel agreed that the best approach is to be transparent with staff about the transition, keeping them informed from the beginning and addressing their concerns promptly. By providing them with the necessary answers and reassurances, you can foster a sense of security that will prevent employees from seeking opportunities elsewhere. Open communication is key, as withholding information or failing to address concerns can lead to dissatisfaction and ultimately, employee attrition.

Here are some important considerations regarding employees:

  • Which & how many employees are staying?
    • Is the buyer providing an equitable benefits package with commissions, health insurance, etc?
  • Will any employees be let go?
    • Whose responsibility is it to have these conversations?
    • Who will pay severance, unemployment claims, etc?
  • Who pays commission owed to producers?
    • If producers leave, do they take their book of business with them?
  • Are any incentives being provided to motivate employees to stay with the agency through the transition(e.g. a bonus for agency growth)?
  • How will the M/A affect the roles and workload of current staff?
  • How do current employees feel about the M/A?
    • Have they been adequately informed about the M/A, or do they have questions?
    • Are any employees at risk of leaving due to the transition?
  • What training will be provided for staff on new tools and processes?
  • How is the agency’s branding affected by the M/A?
    • Do staff understand how to refer to the agency and explain the changes taking place to customers?

Prepare for a successful sale

Navigating an agency acquisition or merger can be a daunting task, whether you’re on the buying or selling end. By keeping in mind the points in this article during the negotiation process and transition, you can ensure that the agency not only maintains its value, but also maintains the satisfaction of its customers and employees both during and after the sale.

Download HawkSoft’s agency acquisition checklist

Download our checklist to see top questions to ask when negotiating the acquisition or merge of an independent insurance agency.

Author bio:

Since 1995, HawkSoft is a leader in management systems for independent insurance agencies that want effective workflows and a delightful experience for staff and policyholders. HawkSoft offers the following promise to insurance agents: your investment in HawkSoft will pay for itself in the first year. Learn more about HawkSoft’s unique father-and-son story here, or request a demo to learn more about our agency management system.



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