What to Look for When Buying an Insurance Agency

After a deal has already closed, agencies can sometimes discover things about the agency that weren’t found in a rushed due diligence process. At that point, they're either going back to the seller for recourse, or they're out a lot of money and trying to figure out how to pay the bank loan.

Almost every one of those deals looked good on paper. The buyer just didn't ask the right questions before signing. If you're working out what to look for when buying an insurance agency, start with the ways other buyers have gotten it wrong.

Why buyers regret insurance agency acquisitions

We see the same couple of problems most frequently:

Retention goes down the drain once the ownership transfer occurs. The clients were tied to one specific person, typically the owner, and they leave once the relationship they have

• The multiple was too high, and the deal doesn't cash flow. The buyer priced the agency on what they hoped it would do and took on debt to match. Now the revenue coming in doesn't cover the payment.
• Producer-owned books turn up after closing. The buyer thought every dollar of revenue was part of the purchase. Some of it belonged to producers and was never the seller's to sell.
• The growth didn't transfer. The agency was growing because of the owner, a key producer, or a service team that left once the new owner took over. The buyer paid for growth that walked out the door.
• Key staff begin to retire or leave. Agency staff aren’t interested in the changes in process or technology that happen during a transition and begin to leave the agency, leaving the buyer to find quality talent in their place.

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What to look for when buying an insurance agency: the questions buyers skip

Revenue is usually the first number a seller shares, and on its own it tells you very little. The questions that protect you fall into four areas. These are also the questions buyers most often skip.

Talent and continuity

Start with how the book will carry on after the owner steps away. Look at staff metrics like age, tenure, role, and retirement plans. Look at how transferable the client relationships are. Then ask whether the agency has a growth strategy that works without the current owner driving it.

"With an acquisition, change follows," Carey Wallace, founder of AgencyFocus, says. That might mean a new management system, or new rules about remote work or coming into the office. People close to retirement are less likely to stay through that kind of change. When they leave, retention can go with them.

Mix of business

Find out what the book is actually made up of. Ask for the split between personal and commercial lines and the top lines of business. Ask for concentration metrics, too: how much revenue sits with the largest accounts, the biggest carriers, or a single niche.

Book of business mix is beginning to impact what an agency is worth. Commercial lines agencies have been gaining value compared to personal lines (Fall 2026). Then, concentration affects how much risk you're taking on. If one account, carrier, or producer’s book makes up a big piece of revenue, losing it after closing hurts more than the headline numbers suggest.

Ownership of renewals

Ask who owns the book. Some revenue belongs to the agency, or may belong to producers under their agreements, and that revenue can leave with them or may never have been for sale.

One sneaky problem that we have seen agencies run into is not actually being able to take over the carrier appointments as expected. Ask how sticky the carrier contracts are once ownership changes. Renewals you can't keep writing aren't worth the same as a book that transfers right over to your code.

Financial health

Look at how the agency has performed over the past several years and where the upside is for you. Work from revenue and EBITDA as a percentage of revenue. Premium tells you almost nothing about what you're buying.

Then run the deal against your own finances. Figure out what multiple makes sense for this agency and what the debt will cost you. Make sure the cash flow covers it if a few things go wrong. After that, look for the places this agency could perform better under your ownership than it does today.

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What to do before your next offer to buy an agency

Request a staff census. Get the age, tenure, and role of everyone who services the book, and ask the seller who's planning to retire in the next few years.

Get the book broken down. Ask for the PL/CL split, the top lines of business, and the share of revenue tied to the largest accounts and carriers.

Confirm who owns every renewal. Read the producer agreements and list any producer-owned books. Confirm your carrier access before you put a price on the revenue.

Stress-test the loan. Model your bank payment against the agency's cash flow in a version where some staff leave and retention slips. If the payment only works when everything holds, the price is too high.

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What this looks like in a real deal

Here's an agency that sold as the market was starting to harden. It was in the Southeast, with $4 million in revenue and 25% EBITDA. It had 22 employees and a book that was 65% commercial with very little benefits.

On financial health and mix of business, it looked strong. At $10 million, a buyer would pay 10x EBITDA, roughly two and a half times revenue. For an agency that size, most buyers would call that a low bar. The seller had 12 to 13 times EBITDA in mind.

Then came the talent and continuity question. About 72% of the staff was over the age of 68. Any buyer would be inheriting a service team unlikely to stay through the change an acquisition brings, along with the retention risk that follows. The agency sold for about 7.75x EBITDA.

"You gotta go deep in the data in order to know what you would do," Carey says.

If you're selling, the same four areas show you what to strengthen before you go to market, and an agency valuation tells you where you stand today. If you're buying, the owners who call us after closing didn't lack interest or financing. They skipped a question in one of these areas and got the answer after the money was gone. If you're weighing an acquisition and want someone to pressure-test the numbers and the debt behind them, talk to us about fractional CFO support.