The insurance distribution industry includes approximately 40,000 independent insurance agencies in the United States, generating an estimated $55 billion in commission and fee revenue across personal lines, commercial lines, benefits, and specialty insurance products. It is one of the most actively acquired industries in the entire small business market — more insurance agency transactions close annually than in virtually any other sector — driven by PE-backed brokerage platforms that have built massive acquisition machines completing hundreds or thousands of deals per year.

The primary valuation method for insurance agencies is a multiple of revenue (commission and fee income), which is uniquely appropriate for this industry because insurance agency revenue has inherently recurring characteristics — policies renew annually, and well-managed agencies retain 88–95% of their revenue year over year without new sales. Insurance agencies typically trade between 1.5x and 2.5x revenue, with premium agencies reaching 3.0x or higher. The range is driven by the composition and quality of the book: commercial-weighted agencies with high retention, diversified carrier appointments, and multiple producers command the top of the range, while personal-lines-heavy books with single producers and moderate retention sit at the bottom. SDE multiples for agencies typically fall between 2.5x and 4.0x, reflecting the high margins and low capital requirements of the insurance distribution model. An agency at 2.5x SDE is typically personal-lines-heavy with the owner as sole producer. An agency at 4.0x has a commercial-weighted book, 90%+ retention, two or more producers, and demonstrated organic growth.

EBITDA multiples for larger agencies — those generating $500,000 or more in EBITDA — range from 7x to 10x, driven by aggressive PE competition for scale platforms. At this level, buyers evaluate the agency's growth trajectory, commercial specialization, producer depth, carrier portfolio, and geographic position. The premium EBITDA multiples in insurance reflect a fundamental reality: recurring commission revenue in a well-managed agency has characteristics closer to subscription software than to traditional service businesses, and PE buyers price it accordingly.

Revenue multiples are the most commonly referenced metric in insurance agency transactions, and they serve as a reliable primary valuation tool because of the industry's strong retention characteristics. A 1.5x revenue offer typically reflects a personal-lines-heavy book with moderate retention and limited growth. A 2.5x offer reflects a commercial book with 90%+ retention, multiple producers, and strong carrier relationships. Revenue multiples above 2.5x are reserved for agencies with specialty niches, exceptional growth rates, or strategic value to a specific platform buyer.

The unique valuation factor in insurance agencies is the renewal commission stream and its extraordinary durability compared to revenue in any other business. In most businesses, revenue must be re-earned every year through new sales, client retention efforts, and ongoing service delivery. In insurance, policy renewal is the default — clients must actively cancel or move their coverage for revenue to decline. This structural characteristic means that an insurance agency's book of business is closer to an annuity than to a traditional revenue stream, and buyers price it as such. The quality of this annuity depends on two factors that most owners conflate: the retention rate (how many clients renew) and the book composition (what type of policies they hold). A personal lines book with 88% retention loses 12% of revenue annually, requiring substantial new production just to stay flat. A commercial book with 94% retention loses only 6%, compounding the revenue advantage year after year. Over a five-year projection — which is the horizon most PE buyers model — this retention differential creates a dramatic difference in projected cash flow, which is why commercial books command multiples that can be 50–80% higher than personal lines books at the same current revenue level.

The insurance agency M&A market is the most active and well-capitalized of any small business sector. PE-backed platforms — including Hub International, Acrisure, Assured Partners, NFP, and dozens of others — each complete hundreds of acquisitions annually, creating intense competition for desirable agencies. This buyer competition has pushed agency valuations to historical highs, particularly for commercial-weighted, multi-producer agencies with strong growth and retention metrics. The environment is favorable for sellers who meet platform criteria. Personal-lines-heavy agencies and single-producer books attract a narrower buyer pool — primarily other independent agents, smaller aggregators, and individual buyers — at more moderate multiples. The gap between platform-quality and non-platform-quality agencies is the widest it has been, making the strategic decisions around book composition, producer development, and growth investment more consequential than ever.

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