We received a call from a client that searched for an insurance agency to acquire for 18 months. He found a candidate, met the Owner and was positive he’d be buy this agency. After the first 2 visits, The Seller warmed up to him and gave him 3 years of financial information. After another week and another visit, the Seller gave him commission statements to reconcile against the financials.
Everything seemed to be going smooth until one day Mr. Buyer went in for a visit and proceeded to ask a variety of questions about the financials, insurance carrier loss ratios, commission statements, employees and other items regarding the agency for sale.
The Seller wasn’t prepared to answer all of these questions and told Mr. Buyer he’d call him in the next day or two with the answers he couldn’t provide.
Instead of receiving the answers to his questions, Mr. Buyer received a letter from the Sellers attorney demanding all of his paperwork and due diligence material be returned and that he sign a release promising not to mention any of the confidential information discussed with the Seller.
The Buyer immediately called The Seller but Mr. Seller wouldn’t take his calls. The Buyer was very upset, after 18 months of searching, he found the insurance agency he wanted to buy but the seller suddenly turned against him. Most of the questions he was going to wait for answers on weren’t that important anyway. He wrote the buyer a letter asking where things went awry only to get no response, then a letter from the buyers attorney.
We were hired by the buyer and contacted the seller and learned what went wrong. The Seller said the way the buyer was asking questions to verify information was offensive. The seller said “He sounded like he thought I was lying to him”
40 days after our first contact with the seller, the buyer completed the transaction and acquired the agency it took 18 months to locate.
The reason we’re writing this post is so buyers and sellers understand the value of hiring an intermediary to help you buy or sell a business. As your main point of contact we can ask questions, research answers and prevent buyers and sellers from becoming offenended. SOmetimes buyers will walk away from a deal becuase they assume something and are too embarrased to ask the seller about it.
Whether you’re looking to buy or sell an insurance agency or brokerage, you owe it to yourself to contact us and learn how we can help you.