How much is my insurance agency worth is a question most principals ask long before a sale is on the horizon. Whether you plan to exit in a year or simply want to benchmark performance, understanding valuation helps you make smarter investments in producers, technology, and client experience.

What drives an agency’s value

• Revenue quality: Recurring commissions, diversified carriers, and low concentration by client and line are more valuable than one‑time fees or a few jumbo accounts.
• Growth profile: Consistent organic growth outperforms episodic spikes. Buyers pay premiums for clear pipelines and repeatable sales motions.
• Retention and mix: Personal vs. commercial, small group vs. large group benefits, and specialty niches all carry different risk and multiple ranges. High retention and a defensible niche increase value.
• EBITDA margin and add‑backs: Clean financials with documented owner add‑backs (owner compensation above market, one‑time projects) translate into higher adjusted EBITDA and better multiples.
• Carrier relationships and contingents: Stable contingency history and breadth of appointments increase durability of earnings.

Common valuation approaches

1. Market multiples: Apply an EBITDA or revenue multiple observed in comparable transactions. Community agencies might trade at lower mid‑single‑digit EBITDA multiples, while scalable niche agencies with strong growth command higher.
2. Discounted cash flow (DCF): Projects future cash flows and discounts them back. Useful when growth or margins are changing.
3. Rules of thumb: Often 1.5–3.0x revenue for very small books or 5–9x EBITDA for solid firms, but actual outcomes depend on growth, mix, and risk.

Quick back‑of‑the‑envelope

• Start with adjusted EBITDA. Normalize owner pay to market, remove one‑time items, and include realistic producer comp.
• Pick a multiple based on quality and growth:
  • Emerging or flat growth, key‑person risk: 4–5x EBITDA
  • Solid growth, diversified book: 6–7x EBITDA
  • Niche leader, strong pipeline and retention: 8–9x+ EBITDA
• Example: If adjusted EBITDA is $1.2M and quality is solid, 6.5x implies ~$7.8M enterprise value before working capital and deal structure.

How to increase your multiple in 6–12 months

• Document processes: Pipelines, renewal calendars, and SOPs reduce key‑person risk.
• Deepen niches: Specialization supports pricing power and higher retention.
• Professionalize financials: Monthly closes, accrual accounting, and clear add‑back schedules build buyer confidence.
• Widen carrier and client concentration: Cap any single client under 10% of revenue and diversify carrier appointments.