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Insurance Agency Acquisition Due Diligence Checklist

By September 3, 2020Blog
mergers and acquisitions require the right due diligence

Completing due diligence helps any buyer understand more about a company before purchase. It is a major step in making insurance agency acquisition decisions as it helps appraise a company’s financials, operational structure, and book of business. As part of any Mergers & Acquisitions transaction, an agency will prepare a disclosure list that addresses these key topics and any exceptions. Any documentation should be accessible electronically for all parties, including legal counsel, to review.

KAI has M&A resources and expertise to help create and review due diligence checklists and conduct legal review for structuring a final deal.

Key Pieces of a Due Diligence Checklist

Overview of Organization and Structure

A buyer will want an overview of your organization’s structure including directors and officers, corporate bylaws, and agreements related to any sales or purchases of businesses. This includes stockholder agreements, list of security holders, securities, and any recent restructuring documents, if applicable.


A buyer will want not only your financial statements to review your current assets and liabilities but also a projection of your agency’s future performance. This may include revenue growth projections, budget status compared to what was approved, capital expenditures, and any Accounts Receivable issues.

Strategic Fit/Competitive Landscape

Finances are not the only component that a buyer will use to determine fit. Does your agency provide unique products, services, or technologies that could enhance revenue? Who are your top competitors and how does your agency differentiate? What is the fit between leadership and staff? Will there be any ways to save on costs? How long will transition take?

Contracts and Property

A lawyer will review any contracts that are in force, such as joint ventures, equipment leases, non-compete agreements, employment contracts, real estate agreements, franchise agreements, and equity finance agreements. They will want to review stock sale agreements, or any agreement related to the purchase or sale of a business. They will also review agreements between current or former officers or stockholders of the company. Review of any property is also essential including deeds, leases of real property, or operating leases.

Customer Landscape and Sales Capacity

Buyers will want to understand your book of business, sales pipeline, and value proposition. Who are your top customers, and are they satisfied with your service? Are there seasonal fluctuations in sales? How are sales your producers compensated?

HR-Related Issues

Thorough review of employment obligations including employment compensation and agreements, summary of employee benefits, officer compensation, and incentive arrangements will be conducted.

Governmental Compliance

A buyer will want to ensure local, state, and federal compliance including correspondence and reporting with municipalities, FDA, OSHA, and ERISA.


Thorough review of any filed or pending litigation, claims made against the company, arbitration and settlement terms will be made.


A buyer will want to review any insurance policies of an agency including health, auto, EPLI, Workers’ compensation, GL, D&O, key man, and umbrella policies.

Technology/Intellectual Property

A buyer will want to understand any special technology or intellectual property you have, including patents, copyrights, trademarks, trade secrets, domain names, or liens on intellectual property.

Environmental Considerations

Not always thought of as part of an acquisition, a buyer may review any potential environmental liabilities such as past environmental claims or litigation, Superfund exposure, or records of any environmental investigation made on company property.

Marketing Strategy

What is your agency’s marketing strategy and sales goals? Buyers will review marketing plans, product literature, and conduct a review of the markets you serve.