Valuation & Benchmark Data for
Independent Insurance Agencies
Industry Overview
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There are an estimated 424,900 insurance agenceis/brokerages in the U.S.
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The industry's growth is expected to slow from an average annual growth rate of 1.5% from 2019-2024 to 0.4% over the next five years.
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Average Profit Margin: 17.5%
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Average Revenue per Employee: $200,000
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Average Number of Employees: 2.5
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Average Wages per Employee: $72,060
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Commercial P&C: 29.8%
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Personal P&C: 27.1%
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Health & Medical: 13.7%
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Life & Accident: 9.4%
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Annuities: 2.9%
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Insurance administration & risk consulting: 1.6%
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Other: 15.5%​
Segmentation
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Profit: 17.5%
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Wages: 36.0%
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Purchases: 2.5%
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Depreciation: 1.3%
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Marketing: 1.5%
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Rent & Utilities: 1.4%
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Other: 39.6%
Average Profit & Expense Margins
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Agency Sales Information
Demand to acquire independent agencies remains strong. The primary types of buyers include:
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Local independent agency owners looking to grow through acquisition
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Current captive agents looking to go independent
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Larger regional and national brokerages
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Private Equity backed firms
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Family Offices​​
Closed transaction data. Last update: August 2024.
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Average SBA Loan Amount: $854,433
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Average SBA Down Payment Percentage: 87%
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Average Days To Sell: 174​​​
Agency Valuation Multiples
Historically independent agencies have been priced based on a multiple of gross revenue. In recent years multiples of Seller's Discretionary Earnings (SDE) on smaller agencies and Earnings Before Taxes Interest, Depreciation & Amortization (EBITDA) for larger agencies have become more common. Both SDE and EBITDA offer a more accurate reflection of an agencies true value.
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Small Agencies are Underrepresented
It's estimated that 80% of independent agencies generate less than $1.25 million in revenue. However, most of the data used to quote multiples - ranges such as 2 to 3 times revenue or 5 to 8 times EBITDA - applies to larger agencies.
For example, one industry leader defines "small" agencies as those with an EBITDA between $500,000 and $2 million. With an average industry profit margin around 20%, an agency would need approximately $2,500,000 in revenue to achieve $500,000 in EBITDA and $10 million to reach $2 million in EBITDA. ​​​​
Factors Affecting Valuation Multiples
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While cash that the agency can generate after taxes is the fundamental source of value, there are a number of factors beyond the P&L that impact the true market value of an agency. ​
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Examples include:
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Geographic location
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Retention rate
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Quality of the book of business
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East of transition
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Carrier contracts and relationships
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Agency reputation and branding
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Marketing and sales processes
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Sales and support staff
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Synergies and cross-selling opportunities
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Systems and recordkeeping
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Personal vs commercial lines
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Number of policies per customer
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Organic growth potential
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Customer demographics
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The economy
Small Agency Completed Transactions Data
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​​​Averages for all agency transactions completed . Last update: August 2024.
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Under $1 Million Revenue
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Revenue Multiple: 1.62x
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EBITDA Multiple: 4.24
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$1 Million - $5 Million Revenue
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Revenue Multiple: 1.94x
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EBITDA Multiple: 7.68
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​​Sources: DealStats, SEDAR and SEC filings, Business Reference Guide.
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The data below represents a sample of 14 completed agency sales from the past two years. Finding actual closed transaction data on smaller agencies can be challenging, as most published data pertain to larger agencies with over $5 million in revenue. ​​
MVIC (Market Value of Invested Capital) = Selling Price
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Net Sales = Revenue
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Sources: DealStats, SEDAR and SEC filings, Business Reference Guide.​​
Next Steps
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Schedule a confidential, no-obligation initial consultation by clicking here
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Learn the Fair Market Value of your agency request a detailed analysis report
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