Our Valuation Methodology

Buyers underwrite acquisitions on cash flow, not gross revenue. The financial category examines your last 12 months of revenue, multi-year growth trend, and owner earnings (SDE/EBITDA). A consistently profitable agency with rising revenue is the single most powerful signal a seller can show a buyer.

• Healthy owner earnings margin is the foundation every buyer starts with
• Consistent multi-year revenue growth meaningfully strengthens the offer
• Books above $1M in revenue access a significantly deeper buyer pool

Retention rate is the closest thing to a guaranteed income stream that exists in an insurance book. Buyers and lenders scrutinize it heavily because post-close attrition directly erodes the return on their investment. Client concentration matters equally — if one account represents a disproportionate share of revenue, the buyer is pricing in the risk that they lose it at renewal.

• High retention rates signal a sticky, relationship-driven book buyers will pay a premium for
• Low client concentration means no single account can crater the deal value post-close
• Low retention is one of the most consistent drivers of downward offer pressure in our data

Commercial lines books are valued higher than personal lines books because they carry larger average premiums, longer policy relationships, and meaningfully lower churn. Buyers also look at lines of business mix, average premium per policy, and specialty exposure — high-risk commercial lines like trucking carry their own discount due to volatile loss ratios and limited carrier options post-close.

• Commercial-dominant books attract the strongest buyers and the widest bid range
• Mixed books are the most common profile and serve as the neutral baseline
• High-risk specialty lines are evaluated separately and typically discounted

Buyers pay for momentum. An agency growing consistently — even at a modest rate — signals that the book will continue to expand under new ownership. Declining revenue is the single most disqualifying signal in a P&C agency transaction. It forces buyers to model attrition into every year of their hold, which compresses the offer at every step.

• Strong multi-year growth is the clearest sign of a healthy, scalable platform
• Moderate steady growth is viewed positively and protects the valuation floor
• Declining books require significant due diligence and almost always result in discounted offers

Operations tells buyers how difficult the agency will be to run after they close. E&O claims history, producer agreement structures, carrier relationships, and key-person dependency all get scrutinized. An agency where the principal is the only relationship-holder introduces significant transition risk. Documented processes, strong producer agreements, and a streamlined carrier mix are all hallmarks of a high-quality operational profile.

• Clean E&O history removes a significant legal risk concern from buyer due diligence
• Strong producer agreements protect the book from walking out the door post-sale
• A streamlined carrier mix signals operational efficiency and an easier post-close transition

The mechanics of how you sell matter as much as what you are selling. Buyers place significant value on seller transition length — a longer, well-supported handover de-risks the deal and gives the buyer confidence that clients will not leave simply because the owner did. The scope of the sale (full agency transfer vs. book-only purchase) and how urgently the seller needs to close both directly affect the final offer.

• An extended transition period is one of the clearest signals of a cooperative, low-risk seller
• Full agency sales open more deal structures and buyer types than book-only transfers
• Seller urgency reduces the buyer's sense of competition and typically compresses the price

Agency age, office structure, and employee profile signal institutional durability. A 20-year-old agency with a diversified staff is viewed as a platform acquisition — not a roll-up risk. Virtual and hybrid operations score well because they represent lower post-close overhead. Newer agencies are not penalized by age alone, but they carry less proven track record for buyers to underwrite.

• Established agencies with deep community roots signal lower client flight risk
• Virtual and hybrid models signal lower overhead and geographic flexibility
• Newer agencies can still command strong multiples if the book quality and financials are strong