“Never ignore a gut feeling, but never believe that it's enough," advised business author Robert Heller. The opposite can be true too. Do your due diligence, but never ignore a gut feeling, especially with insurance agency mergers & acquisitions. Buyers and sellers shouldn't be afraid to trust their instincts if a deal doesn't feel right or an opportunity seems too good to pass up.

If you have a sixth sense about a transaction, even after you've done your homework, you may want to listen to that inner voice before making a decision. Here are a few areas where gut feelings could be a determining factor:

1) Numbers. Agency M&A revolves around numbers. Getting an accurate and complete financial picture of the agency is especially critical for the buyer who needs to be able to objectively assess income, cash flow and the overall value of the agency.

Obvious red flags during this process might be missing financial reports and outdated accounting and agency management software. Perhaps the numbers do add up in the end, but an uneasy feeling may give you pause about the deal.

Financials are just part of the picture. You'll also want to look at the quality of the book of business. Does it align with your own markets? Are the accounts the ones that you want to keep?

The buy-sell agreement can be a warning sign as well. Is it a well-crafted agreement and a fair price? If you're getting some bad vibes but still want to pursue the deal, consult with an expert who has experience with agency sales.

2) Culture, people and agency fit. Instincts often come into play when considering intangibles, such as agency culture, business styles and customer loyalty. It's always a good idea to meet the staff of the agency you're acquiring to see how they conduct business and treat their clients.

How well does the agency take care of its employees and customers? If you're pursuing an acquisition, how easily can you integrate the agency into your systems? Can the teams work well together and add new markets? Do your business styles complement each other?

Sellers have their own gut issues, too. Will the new owner take care of the staff? Will they carry on the previous owner's legacy and be involved in the community? Is there a place for the prior owner if they want to stay on as a manager or producer?

3) Data and intuition. Malcolm Gladwell popularized the concept of making decisions in a “blink" based on intuition, but he also cautioned that hunches must be tempered by experience and knowledge. Listening to your gut is important, but so is gathering information and getting the advice of experts.

Accountants, attorneys and bankers with agency M&A experience can be a valuable resource. An industry bank that knows how to underwrite an insurance acquisition can offer financing options and validate those gut feelings you may have about a transaction.

Learn to trust your instincts, and also do your homework. The two go hand in hand.

Scott Freiday is senior vice president and division director of InsurBanc, a division of Connecticut Community Bank, N.A. Started in 2001 as a vision of the Big “I," InsurBanc finances acquisitions and perpetuations and helps agencies become more efficient by providing cash-management solutions.