Slice due diligence — the six areas to review in 30–60 days.

Diligence on a slice is an exercise in proportion. You're not vetting a company — there's no management team to assess, no entity to audit, no integration of back-office systems. You're verifying that a defined set of policies is what the seller says it is and that it will transfer cleanly. That makes the work fast, but it concentrates the risk: with fewer things to check, the things you do check carry more weight, and the one that carries the most is retention.

§ 01 · The six areasWhat to review, and how long it takes.

Six areas frame the review. Policy-level data quality: request a policy export, sample 10–20 policies (random plus a few large accounts), verify against the carrier, and assess migration effort. Retention history and trajectory: three years of renewal data, the rate, the direction, and a churn analysis — with the top-10/20 accounts examined separately. Carrier mix and transferability: the carrier list, concentration, transfer requirements, appointment overlap, and change-of-agent paperwork, confirmed carrier by carrier. Client quality and concentration: top-10 and top-50 share, average premium per customer, geographic spread, and any large-customer contract requirements. Transition readiness: export capability, paperwork readiness, staff availability, a customer-communication plan, and compliance status. Customer-relationship protection: identifying customers who hold policies in both the slice and the seller's retained book and agreeing how shared customers are handled (all-in or all-out), documented in the purchase agreement before close. The shared-customer safeguard itself is detailed in customer relationship protection.

§ 02 · The five-week cycleHow the timeline runs.

The areas run mostly in parallel across a compressed cycle. Week one: data quality, retention, and an initial carrier assessment. Weeks two to three: complete retention and carrier transferability, begin client concentration, and schedule the transition meeting. Weeks four to five: complete concentration, transition readiness, and the relationship-protection determination, and write the diligence memo. Weeks five to six: execute the purchase agreement, finalize the shared-customer handling, prepare carrier paperwork, and draft client communication. Weeks six to eight: close, fund, execute the carrier paperwork, transition the management-system records, and send the client communication. The whole thing is 30–60 days from LOI to close — fast because a slice has limited decision points, not because anything is skipped. The data-sampling rule keeps it honest: sample 10–20 policies, random plus a few large accounts, because the random sample catches systemic issues and the large-account sample catches concentrated risk. The valuation those inputs feed is built in how to value a slice.

§ 03 · The churn distinctionThe most important analytical move.

The churn analysis is where slice diligence earns its keep, because the retention number alone doesn't tell you what you're buying — the reason behind the churn does. Seller-specific churn happens because the seller disengaged: they stopped servicing the book, stopped cross-selling, let renewals lapse. That churn likely resolves once the book is under active ownership, so a declining retention trend driven by seller neglect can actually be an opportunity. Customer-specific churn happens for reasons that follow the customer — price sensitivity, a competing relationship, a business in decline — and it persists regardless of who owns the book. The discipline is to never price a slice as if customer-specific churn will resolve; that's the assumption that turns a fair purchase into an overpay. Sorting the two is the analytical core of the retention review, and it's the difference between a retention number you can underwrite and one you're guessing at.

§ 04 · The three pass red flagsWhen to walk.

Three findings should stop a deal regardless of how attractive the rest looks. Unfixable data quality: if the book needs four-plus weeks of manual cleanup before it can be serviced, the deal economics break — the integration cost eats the slice's value. Carrier non-transferability on the majority of the book: if you can't legally move most of the policies to your appointments, there's no book to buy. A rapidly declining retention trajectory: regardless of the historical average, a current trajectory below 70% is a warning sign — the book is unwinding faster than the headline number admits. Any one of these is a "pass," and recognizing them quickly is part of what makes slice diligence efficient: you're not building a case to proceed, you're checking for the three reasons not to. Clear all three, sort the churn, trust the retention — and the slice is ready to close. The cutover that follows is the work of the integration playbook.

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