Insurance Agency Business Valuation
Insurance Agency businesses are typically priced on one of two earnings figures depending on size: Seller's Discretionary Earnings (SDE) below roughly $1M, and EBITDA above. Applied to insurance agency specifically, the base multiple ranges are 2.5x–4x SDE and 6x–10x EBITDA. Where inside that range your business trades is decided by a handful of specific, buyer-visible factors.
Since roughly 2018 the U.S. retail insurance-brokerage market has been consolidating aggressively. PE-backed platforms — Acrisure, Hub International, PCF Insurance, Alera Group, Baldwin Risk Partners, AssuredPartners, USI, and Higginbotham — deploy multi-billion-dollar bolt-on budgets each year. Commercial P&C books trade at 8–12x EBITDA (roughly 2.5–3.5x commissions) for well-run agencies with 90%+ retention and a producer bench beyond the owner. Personal-lines books price lower (typically 5–8x EBITDA) because retention economics are weaker. Optis Partners' quarterly reports track 700+ agency transactions per year — this is the most consolidated professional-services category in the U.S.
What moves the multiple
Insurance Agency valuation drivers
Industry sets the base range. These specific business-level factors move you up or down inside it.
Client retention rate
Percentage of policies that renew annually. Best-in-class agencies run 92–95% overall; commercial-focused books can push higher. Every basis point of retention above 90% moves the multiple.
Commercial vs. personal lines mix
Commercial-lines commissions are worth roughly 1.5–2× a personal-lines dollar to platform buyers because of higher retention and stickier client relationships.
Carrier concentration
Percentage of revenue tied to the top 3 carriers. Buyers discount agencies with 60%+ concentration in a single carrier because contingents and market access are dependency risks.
Producer bench depth
Number of licensed producers actively writing business beyond the owner. Owner-only books materially compress multiples because the buyer inherits producer transition risk.
New-business production per producer
New commission written annually per producer. Signals whether the book is growing organically or coasting on renewal cash flow.
Deal structure
How insurance agency deals close
Almost every insurance-agency deal above $500K in commissions structures as a stock deal (personal goodwill treatment) with a 20–30% equity rollover into the acquiring platform and a 3–5 year earn-out tied to retention. Sub-$500K commission books occasionally close as asset deals with individual producer buyouts. LOI-to-close on institutional deals runs 90–120 days. Regulatory transfer of appointments and E&O tail coverage are the two diligence items that most commonly slow close.
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Common questions
Insurance Agency valuation FAQ
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