If you’re selling an insurance agency, you know what questions are coming, right?

“How is the company organized? (Corporation, LLC., Partnership, Sole Proprietor)”

“Have you had any E&O claims in the past 3 years?”

Sure, you’re going to get those…and a whole slew of other privacy-smashing inquiries that may leave you wondering whether it’s all worth it.

But, I bet there’s a few questions you’ll be surprised to get during the dance between you and potential buyers. I know we ask them ourselves when buying other insurance agencies. So, let me give you the heads up on 3 surprising questions you may get…and why.

#1 “Does any single industry or client represent 5% or more of total revenue?”

Fairly mundane question, right? Not to an insurance agency buyer. This speaks to the heart of the old adage:

“Don’t put all your eggs in one basket.”

Let’s say, for example, I’m an agency owner and I have a decent sized trucking book of business. (Yay me!) That’s all well and good for my income…..until a hard market comes and sends my go-to trucking carriers heading for the hills.

You see, agency buyers are BIG believers in Murphy’s Law. If it can happen, it WILL happen to them.

Even the brokers your agency uses know the importance of diversifying their book of business. Just look at Markel’s purchase of Alterra as proof.

So, what do you do if you have a large book of business in one industry? Will buyers not talk to you? Not necessarily.

Just be prepared to explain (in detail):

  • Which markets you use for that industry.
  • The depth of relationships you have with those underwriters (or better those carrier executives).
  • E&S options you can count on in hard times.

And, if more than 20% of your total book of business represents one niche market, it might be time to diversify. Just like the concept of insurance itself…spread the risk.

#2 “List all employees related to the principals and state their relationship.”

Notice how the question doesn’t ask about family. It specifically asks you to list anyone related to you, not just spouse or children.

Ever heard the expression, “Blood is thicker than water.”? Relatives have been known to fight at work (gasp!). And relatives can poison the water of your company culture if they’re not happy with their new agency owners.

If you’re considering hiring any relatives prior to selling your agency, this article weighs some of the pitfalls and advantages of hiring relatives. And if you already employ relatives, make sure you’ve got signed employment agreements from them. Agency purchasers will want to know you have them in place.

Make sure any relatives you employ are on board with your decision to sell by asking them:

  • What role do you see yourself playing in the agency’s immediate future?
  • What long-term opportunities do you want to strive for, if you choose to stay on board?
  • What are your fears about me selling the agency?
  • Do you feel you can be a team player for the long haul, if the sale goes through?

Just getting these issues out on the table will go a long way in getting your relatives on board with your agency’s sale. Plus, letting your potential buyers know you’ve taken the time to discuss these things will give them more confidence in moving forward.

#3 “List principal’s activities, memberships, community involvement, etc.”

This question speaks volumes about your prospective buyer’s expectations concerning you…the seller.

They want to know:

  • If you’re going to be around after the sale.
  • If so, how influential you are in your community.
  • How your connections might translate into future new business after the sale.
  • If you’re not sticking around, what relationships and memberships will need to be continued after the sale.

If you plan on sticking around after the ink is dry, make sure you “sell” just how well connected in the community you really are. The more confidence you give your potential buyers about those relationships turning into future sales for their new agency the better.

For example, Chris Paradiso is doing wonderful things in the community with his agency to benefit Connecticut Children’s Medical Center. Those are the types of things that matter to agency buyers.

If you plan to retire after you sell, DON’T hide that fact!

I recently bought an agency that had two principals. One of them made it clear they wanted to retire in a year, while the other was excited to stay on board for at least a few years. This wasn’t a deal breaker for me, because I took the time to discover which of the retiring owner’s relationships were most important to our future success.


Now that you know a few of the more unexpected questions you’ll get from prospective buyers, you’re better prepared to handle “the inquisition period” of selling your agency.

What other surprising information requests have you gotten while selling your insurance agency? How did you answer? What was your prospective buyer’s reaction?