Buying or selling an independent insurance agency can be one of the fastest ways to spark growth, but it’s not without risk. Financial hurdles, cultural misalignment, and integration challenges can turn what looks like a great opportunity into a headache.
A group of industry leaders recently sat down for a candid conversation about what makes acquisitions succeed, and where they can go wrong. Sharing their perspectives were Mike Schlotman, President of CAI Insurance Agency; Mike Gibson of Superior Insurance Partners; Robb Armentrout of Osgood Bank; and facilitators Jeff Smith and Jarod Steed of IA Valuations. Together, they unpacked the lessons they’ve learned about planning, culture, financing, and long-term success.
More Than Just Growth on Paper
The obvious question: why acquire in the first place?
Jeff Smith explained that while producer development and organic growth remain the best long-term value drivers, acquisitions can accelerate progress. “If you look at an agency over ten years, one that pursues acquisitions is likely to be worth nearly 20% more than a comparable agency that doesn’t.”
But it’s not only about numbers. Schlotman pointed out that acquisitions often give agencies access to talent, technology, and infrastructure that might otherwise take years to build. “No two deals are exactly alike,” he said. “But if you know your goals upfront as a seller or a buyer, you can craft a solution that works.”
Culture: The Deal-Maker (or Deal-Breaker)
Everyone agreed: culture can make or break an acquisition.
Jarod Steed called cultural alignment “the most make-or-break factor.” Gibson went further, saying culture is “the most important piece.” He warned that the worst outcome is when an agency joins forces with a partner only to discover the fit isn’t there. “You want to make sure everyone is rowing the boat the same way,” he said.
How do you check for that? Beyond talking with owners, Gibson suggested sitting down with leaders and rising talent inside the agency. Schlotman added that carriers themselves can provide valuable perspective on whether a buyer and seller are aligned in strategy and approach.
Digging Into the Numbers
If culture is the heart of the deal, due diligence is its backbone. Steed defined it simply: making sure what you’ve been told is accurate and reliable so you can make decisions with confidence.
From a lender’s seat, Armentrout stressed the importance of preparation: “The best agencies we’ve financed already have everything in order – tax returns, carrier concentration, retention information.” He noted that something as simple as an outdated website can raise red flags. “When it says last updated 2002, we get a little worried,” he joked.
Gibson added that financials should always be reviewed in context – looking at revenue trends, contingencies, and cash flow over several years, not just surface-level numbers.
Plan Early, Finance Smart
Timing matters. Armentrout contrasted two types of calls he often gets: one from a buyer planning six months ahead, the other from someone who needs to close in two weeks. “Pre-planning is so important because it allows us to help both sides through the process,” he said.
Financing itself has also become more creative. At Osgood Bank, Armentrout often works with agencies on deal structures and tax strategies designed to help both buyer and seller. “To me, it’s real-life Shark Tank,” he said.
After the Ink Dries
Closing the deal is only the beginning. Gibson cautioned against rushing in to change too much too quickly. “Minimal disruption within that culture is key,” he said. That might mean leaving incentive programs, traditions, or team events in place so employees feel continuity.
Schlotman added that transparency is crucial. At CAI, his team makes a point of connecting sellers and employees with others who’ve gone through the process. “It’s one thing for us to say it’s going to be an A-plus experience, but hearing it from someone who’s lived it builds confidence.”
Takeaways for Buyers and Sellers
Acquisitions aren’t new, but the pace and scope of today’s M&A activity have reshaped the independent agency world. Success, the group agreed, depends on much more than closing a deal. Clear goals, strong cultural alignment, solid due diligence, and early planning are the keys for a smooth transition. As Gibson summed it up: “You want to make sure that the outcome is what everybody’s working toward.”
For agency owners weighing a sale or acquisition, the message is clear: start early, look beyond the balance sheet, and never underestimate the power of culture. Reach out to the IA Valuations team at contact@iavaluations.com to discuss your individual situation.
About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 270 valuations to independent insurance agencies across the U.S. Our advisors have 25+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process. Agency Link is a platform that connects buyers and sellers together to further the growth and strength of the IA system. To learn more about IA Valuations, please visit IAValuations.com or contact@iavaluations.com.
The information provided in these documents is general in nature and shall not be construed as personal legal, tax or financial advice for your situation. Please contact@iavaluations.com to discuss your personal situation.
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This article was written using a transcript from an IA Valuations webinar, Minimizing the Risks of an Agency Acquisition, and with the help of Chat GPT.