What Is an Insurance Agency Worth?

Agencies typically sell for roughly 2.3x to 3.8x Seller's Discretionary Earnings. The industry also quotes 1.5x to 3.0x annual commission revenue, with commercial books at the top of that range and personal lines at the bottom. Both methods should be run and reconciled.

Both, and a serious valuation runs both. Revenue multiples are quick and widely quoted but ignore expense structure. Earnings multiples reflect what a buyer actually keeps. When the two diverge sharply, the reason is usually an unusually high or low expense ratio.

Above 90% is strong and supports the top of the range. Below 85% buyers begin discounting heavily, because they are effectively buying a book that shrinks while they are still paying for it.

There is no single average, because price tracks earnings rather than revenue. At the midpoint multiple of 3.0x SDE, insurance agencies at $500,000 of SDE sell around $1,525,000, and at $1,000,000 of SDE around $3,050,000. Typical SDE margin in this category runs near 22% of revenue, so an insurance agency doing $1,000,000 in revenue would often carry about $220,000 of SDE and land near $671,000.

Take your Seller's Discretionary Earnings and multiply by 2.3x to 3.8x. Where you land inside that band is decided by owner dependence, customer concentration, recurring revenue and the quality of your books. An insurance agency at the top of the range looks materially different from one at the bottom, and most of those differences can be improved in the twelve months before a sale.

SDE multiples of 2.3x to 3.8x apply to owner-operated insurance agencies. Once earnings pass roughly $1M to $2M of EBITDA the buyer pool shifts to private equity and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x. The two are not comparable: SDE includes the owner's compensation and EBITDA does not, so the same business shows a higher SDE multiple than EBITDA multiple.

Typically 4 to 8 months from going to market to closing, assuming financials are ready. Agency sales close faster than most because there is no lease, no inventory and little hard equipment. What buyers diligence hardest is retention and carrier appointment transfer, so have three years of both ready.

There is no formula unique to insurance agencies. The method is the same one used across small business sales: recast earnings into Seller's Discretionary Earnings, then multiply by the industry band, which for insurance agencies is 2.3x to 3.8x. Three valuation methods exist in principle. The income approach, applying a multiple to earnings, is what nearly every real transaction uses. The market approach compares against recorded sales of similar businesses and works as a cross-check. The asset approach values equipment and inventory and generally sets a floor rather than a price.

Yes. The calculator on this page applies the same 2.3x to 3.8x band used throughout this guide, adjusted for owner dependence, margin quality and business age. It takes five inputs and returns a market range rather than a single figure, because real transaction prices move with deal structure and buyer type.

A market valuation estimates what a buyer would likely pay and is what you need to decide whether to sell. A formal appraisal is a certified document prepared to a defined standard, and is normally required only for litigation, divorce, estate and tax matters, or an SBA loan on the buyer's side. For planning an exit, a market valuation is the right instrument and is far cheaper.