Our Valuation Methodology
Agency Appraiser uses a 7-category scoring model built from real insurance agency M&A transaction data. Every adjustment to your multiple maps to a factor that buyers and lenders actually underwrite when placing a bid.
The Core Formula
Base
SDE / EBITDA
Multiplier
1.0x – 4.0x+
Valuation
Offer Range
We use SDE (Seller Discretionary Earnings) or EBITDA as the base — not gross revenue — because buyers finance acquisitions based on cash flow. The multiple is then built up category by category from a neutral baseline of 2.0x, with positive and negative adjustments applied for each scored factor.
Industry Benchmark Multiples
Based on observed transaction data for independent insurance agencies in the United States.
| Agency Profile | EBITDA Multiple Range |
|---|---|
| Personal Lines Dominant, Small | 1.0x – 1.8x |
| Mixed Book, Average Retention | 1.8x – 2.5x |
| Strong Commercial, Good Growth | 2.5x – 3.2x |
| Premium Commercial, High Retention, Growing | 3.2x – 4.0x+ |
Captive agents (State Farm, Allstate, etc.) are not included — captive books have very limited transferable value and are outside this model.
The 7 Scoring Categories
Each category drives a directional adjustment to your final multiple — some factors carry more weight than others based on how buyers and lenders actually underwrite agency acquisitions.
Revenue (LTM, Y-1, Y-2), SDE / EBITDA, and CAGR form the foundation. We use EBITDA as the base and apply a multiple rather than a simple revenue multiple, because profitability tells buyers how much they actually take home.
- EBITDA margin > 25% — strong buyer signal
- Consistent 3-year CAGR — meaningfully lifts the multiple
- Revenue > $1M — opens institutional buyer pool
Retention rate and client concentration are the two most scrutinized metrics in any P&C agency transaction. A single client accounting for more than 10% of revenue is a material risk flag that buyers price into their offer.
- Retention > 90% — notable upward impact on multiple
- Top client < 5% of revenue — ideal concentration
- Retention < 75% — significant downward pressure
Commercial lines books command higher multiples than personal lines because they carry larger average premiums, longer relationships, and lower churn. A 70%+ commercial book is considered premium by most acquirers.
- Commercial-dominant book — strong positive impact
- Mixed book (40–70% commercial) — neutral baseline
- Personal lines-dominant — moderate downward adjustment
Buyers pay for momentum. Three consecutive years of growth — even moderate growth — meaningfully increases the multiple. Declining revenue is the single biggest red flag in a transaction and applies a material discount.
- Strong growth (10%+ / yr) — significant upward impact
- Moderate growth (3–9% / yr) — positive impact
- Flat — neutral
- Declining — most significant discount factor in the model
E&O claims history, producer agreement structure, carrier diversification, and staff retention risk all factor in. An agency with documented processes, no E&O history, and strong producer agreements is far easier for a buyer to integrate.
- Zero E&O claims history — positive adjustment
- No single carrier dominating revenue — healthy diversification
- Documented processes + low staff key-person risk — premium profile
Seller transition length, closing urgency, and scope of sale (full agency vs. book-only) all adjust the final multiple. A longer, well-supported transition de-risks the deal for buyers and increases offer value.
- Extended transition period — positive impact on confidence
- Full agency sale vs. book-only — scope affects the multiplier
- Seller urgency — can compress the final offer
Agency age, primary state market conditions, and employee count signal stability and scalability. Agencies established 10+ years with diversified staff are viewed as durable platforms rather than one-person operations.
- 25+ years established — premium stability signal
- 10–24 years — strong track record
- Under 5 years — early stage profile, modest discount
Important Notes on Accuracy
- This tool produces preliminary estimates, not formal appraisals. Final transaction values depend on buyer-specific synergies, deal structure, and market conditions at the time of sale.
- Multiples shown are based on observed independent agency transactions. Captive agents, surplus lines specialists, and specialty MGAs may fall outside these ranges.
- Carrier book valuations use a different model — commission revenue (not written premium) is used as the base, with loss ratio and retention as the primary drivers.
- Results are confidential and used only to provide your valuation report. No data is sold or shared with third parties.
Ready to see your number?
Run the full 7-category calculator and get your personalized valuation range with a risk audit.