How to Value an Insurance Agency (2026)
Small agencies are worth 1 to 2 times what they collect in commissions each year. Bigger agencies are worth 5 to 14 times profit. Which one applies to you comes down to size.
- Under $500K in commissions: buyers multiply your commissions.
- $1M or more in profit: buyers multiply your profit, and that usually pays you more.
- In between: you will hear both, and the framing is worth arguing about.
What Agencies Are Worth, by Size
Start here, then adjust using the five factors below. Every agency lands somewhere inside its band, not at the middle by default.
| Your Size | What Gets Multiplied | Typical Price | Who Buys |
|---|---|---|---|
| Under $500K in commissions | Commissions, or what the business pays you in a year | 1.0x to 1.8x commissions | Individuals, often with a bank loan |
| $500K to $3M in commissions | Either one, depending on the buyer | 1.5x to 2.5x commissions, or 5x to 7x profit | Small roll-ups, local competitors |
| $1M to $5M in profit | Profit, last twelve months | 7x to 10x profit | Investor-backed buyers |
| $5M or more in profit | Profit, last twelve months or next year’s forecast | 10x to 14x profit | National firms, the largest investor groups |
See what your agency comes to in the insurance agency valuation calculator.
Small deals in the top row usually run through a bank. The SBA caps its main loan program at $5 million, which is more than enough for that tier.
Work Out Your Real Profit First
Your tax return understates what your agency earns. Buyers rebuild the number as if a hired manager ran the place at market pay.
That rebuilt number is what gets multiplied, so every dollar you can defend is worth seven to ten dollars at closing.
- Add back the extra you pay yourself. If you take $350K and a hired manager would cost $120K, that is $230K back.
- Add back one-time costs. A lawsuit you settled, an office build-out, anything that will not happen again.
- Add back personal spending. Car, travel, phone, whatever runs through the business but is really yours.
- Take out revenue that leaves with you. If a fifth of your book follows you personally, careful buyers strip it out before they multiply.
- Know how your buyer treats bonus income. Some investor-backed buyers ignore carrier profit-sharing entirely, because it moves with the carrier’s loss year. If it is more than 10% of your revenue, ask early.
Insurance Agency Valuation Calculator
1. How Many Clients Stay: worth 2 turns or more
Keep 92% and you get premium pricing with more cash at closing. Fall under 80% and buyers cut two turns and hold back more of your money.
Write down your number for each of the last three years before you talk to anyone. If you do not have it, a buyer will work it out, and their version will not flatter you.
2. What You Write: worth 1 to 2 turns
Commercial, benefits, and specialty accounts beat auto and homeowners. They are bigger, harder to replace, and clients move them less often.
Shifting from 80/20 personal-to-commercial to 70/30 over two years is one of the best-paying moves available to a mid-sized agency.
3. How Much Rides on One Carrier: worth up to 1 turn
Over 40% with one carrier and buyers price in the risk that the carrier says no to the new owner. Start spreading business 12 months out.
4. Whether You Are Growing: worth up to 1 turn
Three straight years of 6% growth, on top of rate increases, prices above the middle of your band. A flat book prices below it.
5. How Much Rides on You: worth 1 to 3 turns
If you personally produce and hold more than 40% of the book, buyers discount for the risk it walks out with you.
This is the most common reason an agency sells below its band. Moving relationships to your staff takes 12 to 24 months, so start before you go to market.
A Worked Example
Say your agency collects $2M in commissions and clears $500K in profit after the add-backs above.
- Priced off commissions at 1.8 times: $3.6M.
- Priced off profit at 8 times: $4M.
- Same agency, $400K apart. At $1M of profit on the same commissions, the gap gets wider still.
That is the whole reason buyers pick a framing and stick to it. Run both before you respond to an offer. For what each tier actually sells for, see our guide to insurance agency sale multiples.
Why the Headline Number Is Not What You Keep
Buyers quote one big number. It usually bundles cash at closing, money that depends on the book holding, and a slice of ownership in their company.
A 9 times headline can land at 6 or 7 times once you weigh the parts you might never collect.
- The split matters as much as the total. Buyer and seller must agree how the price divides across the assets and report it to the IRS on Form 8594.
- Different pieces are taxed differently. Money paid for the book itself can qualify for the 15% to 20% long-term rate. Money paid for a non-compete is taxed like a paycheck.
- Non-competes usually run five years and cover the area you serve. The IRS treats one as a business asset that has to be valued in the split.
For the full tax picture, see our guide to asset sale versus stock sale tax.
Related Guides
- New York sellers: what an agency is worth in New York, and what the state taxes.
- Once you have a number, check how much of it is actually cash at closing.
- Insurance agency sale multiples by tier
- Who buys insurance agencies, and what each type pays
- How long it takes to sell an insurance agency
- Selling an insurance agency in Pennsylvania
- Selling an insurance agency in New Jersey
- What selling costs you: the commission on a deal this size.
Frequently Asked Questions
Start with two numbers: what you collect in commissions each year, and your real profit after adding back your excess pay and personal expenses. Under $500K in commissions, multiply commissions by 1.0 to 1.8. At $1M or more in profit, multiply profit by 7 to 10.
Your stated profit, plus the salary you pay yourself above what a hired manager would cost. Then add one-time costs and personal spending run through the business. Buyers then subtract any revenue that would leave with you. What is left is the number they multiply.
It depends on the buyer. Some investor-backed buyers leave it out entirely, because it rises and falls with the carrier's claims year and is never guaranteed. Others include a smoothed figure. If it is more than 10% of your revenue, ask before you model anything.
More than anything else on the list. Keeping 90% or better earns top pricing and more cash at closing. Falling to 78% can turn a 9 times offer into a 7 times offer. It also pushes more of your money into payments you collect later.
Usually, yes. Benefits clients rarely move, the premium renews every year, and there is more to sell them later. Benefits, professional liability, and specialty books tend to price at the top of their size band rather than the middle.