Three directors of broker Stafford Knight have quit the company rather than be taken over by acquisition-hungry Towergate Underwriting.
David Taylor, David Bedford and Paul Goodman resigned suddenly after their own management buyout bid for Stafford Knight collapsed and Towergate's bid was accepted.
None of the three ex-directors was available for comment.
One inside source says: "The three directors had been fighting for a management buy-out for a while.
"It made their positions untenable once the deal went through."
Insurance Times understands Towergate and Stafford Knight now only have to complete the legal formalities of the deal.
Stafford Knight was believed to be on the market for around £4m, and the deal comes at a time when Towergate has stepped up its aggressive acquisition strategy.
Last month, Towergate beefed up its board by appointing industry heavyweight Kenny Maciver, the former Lombard managing director, to help spearhead the expansion.
He was joined by ex-BMS Associate's managing director Douglas Young.
Both appointments come at a time when Towergate, which specialises in niche business, is struggling to finalise deals.
Managing director Peter Cullum set a target of reaching £200m premium income by the beginning of this year but admitted he fell short by about £70m after several deals collapsed.
The group says it is currently in negotiation with a further 20 brokers.
HSBC analyst, David Hudson, said: "It's a tough old world out there. I've yet to find any company make any real money out of acquiring agency business.
"Brokers are far less profitable than they were and becoming less and less profitable year in year out.
"Some people are happy to use the weakness in these companies to acquire them, but I have yet to find anyone who makes much money out of it."
Towergate has built its portfolio mainly by targeting brokers who are approaching retirement. It provides the backroom facilities while allowing the broker to retain its brand identity.
Stafford Knight has around 25 staff and generates an annual brokerage income of £4m.
The company has two units: one is a Lloyd's broker that has a one of the largest entertainment facilities in the London market.
That outfit also brokers credit insurance, general non-marine business and personal accident.
The second unit is a personal lines and small commercial operation based in Oakhampton.
Towergate's management originally worked as underwriters for Economic Insurance before staging a management buyout in 1993 before selling to Hiscox in 1996.