Sell an Insurance Agency: An Executive Summary
Selling an insurance agency is a pivotal career milestone, and the success of the transition hinges on preparation well before the announcement. This blog outlines five essential steps to maximize agency value and ensure a smooth sale process. The process begins with cleaning up finances and preparing transparent records, which instill buyer confidence. Operational improvements—such as modernizing systems, addressing staffing issues, and tightening workflows—strengthen long-term appeal. The post also emphasizes evaluating agency performance metrics, positioning the business for strong buyer interest, and building a comprehensive transition plan. Finally, it guides agency owners on identifying and vetting the right buyers to align with their legacy and goals. With foresight and structure, sellers can protect their business, attract serious buyers, and secure optimal valuation.
5 Steps Before You Sell an Insurance Agency: How to Prepare for the Best Valuation
Follow these five steps to secure a smoother deal and a stronger agency valuation.
Selling your insurance agency is one of the most significant decisions of your career. While your eye may be set on the final prize, the real work begins long before you announce your intent to sell.
“Laying the groundwork well in advance can be the difference between a smooth, profitable transition and a disappointing sale.”
—Todd Henderson, CEO of Carriage Hill Insurance, a Smart Choice Partners agency
From cleaning up your finances to streamlining operations to evaluating buyers, thoughtful preparation can make all the difference in protecting your business and maximizing its value. Here are five essential steps to prepare your agency for sale — before you go public with your plans.
1. Start with a Financial Review
The first step in getting your agency ready for sale is to tidy up your finances.
Buyers want a clear picture of your agency, beginning with several years of clean financial statements, including profit and loss reports, balance sheets, debts, and tax returns.
Beyond the basics, you should be prepared to provide:
- Revenue by carrier and line of business
- Commission statements
- Expense reports
- Producer compensation and performance data
- Year-over-year revenue growth
- Retention rates
- Book of business analysis
“If you’re an agency owner thinking about selling, the first thing I would do is review all of your expenses, marketing, and carrier relationships with a fine-tooth comb,” says Henderson, an active acquirer of agencies. “Look for areas where you might make cuts or remove any personal expenses you may have been running through the business. You’ve got to clean house to make your agency more marketable.”
Ultimately, buyers expect your numbers to support the valuation you’re asking for, whether that’s a flat figure or a multiple. A clean, transparent set of books signals a disciplined and well-managed operation.
If you’re not sure where to start, consider bringing in a financial advisor or consulting firm experienced in agency sales. An outside perspective can highlight your strengths, flag weaknesses, and help present your agency in the best possible light.
2. Evaluate Your Operations and Structure
Buyers aren’t just purchasing your book of business; they’re investing in the systems, processes, and people that keep your agency running.
The more turnkey your operation is, the more attractive it will be. It’s also important to have a method in place for handling account transfers and customer communications during a sale to ensure a smooth transition.
Start with the fundamentals:
- Review and update carrier contracts to ensure they are current and transferable.
- Consider consolidating business with core carrier partners to strengthen relationships and maximize contingency bonuses.
- Update HR documentation and clarify staff roles.
- Create SOPs for key workflows so your team can handle day-to-day operations without heavy reliance on you.
- Ensure your AMS/CRM is up to date, with clean and transferable data.
- Confirm customer accounts are clearly documented and ownership is established, as this impacts the transfer process.
“As you get closer to a sale, reallocating some of your business to certain carriers and taking advantage of available bonus structures can be really helpful,” says Henderson. “Some agents work with many carriers and spread their business a little bit too thin, rather than focusing on what I call a core or true carrier partner — one you work with closely, day in and day out.”
When doing this, consider methods for managing customer transitions to maintain satisfaction and retention.
3. Research the Market and Potential Buyers
Before you list your agency, it’s important to understand the broader M&A landscape and the buyers you may engage with.
Industry sources like “The Big I” (Independent Insurance Agents & Brokers of America) and Agency Equity provide benchmarks for agency valuations and recent transaction data. Insurance agencies are generally sold using standard methods such as revenue or EBITDA multiples.
Smaller agencies typically sell for 1–2× annual revenue, though strong financial performance, professional presentation, and solid preparation can push valuations higher.
For mid-sized and larger firms, companies looking to buy agencies often use specialized methods and platforms to identify and acquire suitable businesses.
Buyers often shift to EBITDA-based valuations (earnings before interest, taxes, depreciation, and amortization). According to Merger & Acquisition Services, agencies earning under $2 million typically sell for 8–10× EBITDA, while those generating more than $5 million can reach 12.5–14.5×.
For the past few years, agency valuations have benefited from hard market conditions and rising rates. Even as the market softens, there are strategies to maintain strong valuations, according to Henderson. The methods used to value insurance agencies can vary depending on the size and type of company involved.
“Having a solid organic growth plan can give your agency an advantage,” he says. “Without one, a competitor down the street might seize the opportunity. It also depends on each agent’s approach: are you focused mainly on servicing current clients, or are you actively pursuing growth? In a hard market, growth often happens naturally through rates, but in a softer market, agencies that aren’t focused on organic growth risk falling behind.”
It is equally important to evaluate the buyers themselves. Some may present attractive stock options or incentive packages but always verify their claims and avoid over-optimistic projections.
4. Ask the Question: What Happens After the Sale?
When you’re swept up in the excitement of selling, one of the most overlooked questions is: What happens after the sale?
Consider whether you are selling the entire agency or just a portion, such as your book of business. This decision can significantly impact your post-sale planning and future involvement in the industry.
Consider how each buyer will treat your staff, especially if you want the new owner to retain your employees rather than cutting or consolidating.
That ‘slash-and-burn’ approach is common, as Henderson discovered when selling a portion of Carriage Hill. “One potential acquirer asked me to rank my employees from best to worst,” he recalls. “Well, that sent red flags all over. It didn’t take rocket science to read between the lines and understand their intentions.”
Beyond the payout, think about your role, your team’s responsibilities, and the agency’s identity. Will you stay on for a transition period? How will staff be treated? Will your agency’s legacy remain intact? For some owners, selling the agency is part of a retirement strategy, allowing them to step back from daily operations and possibly focus on other areas of the insurance business or pursue new ventures after the sale.
If your vision and the buyer’s vision don’t align, the deal may look good on paper but unravel later. Much like a marriage, the relationship requires shared values and expectations. Don’t be afraid to walk away if the fit isn’t right. Asking tough questions upfront protects your team and your reputation.
5. Get Expert Help
Selling an insurance agency is complex, but you don’t have to navigate it alone. There are many places to get help, including your insurance network.
For example, Smart Choice provides valuation tools, buyer connections, and insight into what makes a deal work.
These services help buyers acquire agencies efficiently and with expert guidance, making it easier for interested parties to buy agencies through a structured and supported process. The network’s state directors also handle a lot of the M&A heavy lifting for you — compiling loss runs, financial reports, NDAs — while keeping the process discreet.
This discretion is important, as Henderson notes: “You don’t ever want to alarm your insurers, or quite frankly, your competitors when you’re exploring a potential sale. There are a lot of pieces that must fall into place before you actually sign on the dotted line.”
A DNA Match-Up
Ultimately, when preparing to sell your agency, finding a buyer with complementary DNA is crucial.
Insurance agency owners should consider not just the sale price, but also how the buyer will pay for the agency and structure the transition. Consider the company culture, the type of business they focus on — commercial, personal, or both — and whether the buyer is an individual or a company. Look closely at their carrier lineup and overall approach.
“The key question is whether this partnership will put your agency and your clients in the best possible position moving forward,” says Henderson.
The best deals aren’t just the most lucrative; they’re the ones that protect your team, preserve your legacy, and ensure a smooth transition. With clean books, strong processes, and early planning, insurance agency owners can position their agency for a sale that feels just right. It is essential to make sure the transition process is complete, with all documentation and responsibilities finalized.
Due Diligence: What Buyers Will Look For
When it comes to selling an insurance agency, due diligence is a pivotal stage that can make or break the deal. During this phase, potential buyers will conduct a thorough review of your agency to verify its actual value and assess its long-term profitability.
This process goes far beyond a surface-level glance at your numbers; buyers will meticulously examine your financial statements, client lists, employee contracts, and all relevant documentation to ensure your business is stable and well-managed.
Buyers are also interested in your agency’s reputation within the insurance industry, its standing in the market, and any competitive advantages that set it apart. They’ll look closely at your technology stack, management systems, and operational infrastructure to identify both strengths and potential risks. The goal is to determine whether your agency is positioned for continued success and growth after the sale.
For agency owners, understanding what buyers are looking for during due diligence is essential. By proactively organizing your records, addressing any operational weaknesses, and being transparent about your agency’s performance, you can instill confidence in buyers and streamline the sales process. Ultimately, thorough preparation for due diligence not only protects your agency’s value but also increases the likelihood of a successful sale.
Plan Today, Protect Tomorrow – Discover more key steps to confirm your insurance agency’s future with a solid perpetuation strategy.
Questions Agents Ask When Preparing to Sell an Insurance Agency
Why should I prepare my insurance agency before selling?
Proper preparation ensures cleaner financials, streamlined operations, and stronger buyer confidence, all of which increase the agency’s valuation. Before starting the sale process, it is crucial to focus on calculating the agency's key financial metrics, such as revenue, and net profit, to accurately present the agency's value to potential buyers.
What financial steps should I take before selling an agency?
You should gather and organize several years of financial statements, review all costs and outstanding loans to ensure the agency's financials are in order, resolve outstanding debts, and ensure consistent profitability to present a strong case to buyers.
How do I make my agency more attractive to potential buyers?
Modernize operations, invest in staff development, and optimize key performance metrics such as client retention and revenue growth.
When is the right time to sell my insurance agency?
Agencies are generally sold when financials are strong, operations are efficient, and market conditions are favorable—often years before you intend to sell.
How do I choose the right buyer for my agency?
Evaluate beyond the purchase price and consider cultural fit, long-term growth strategy, and how the buyer will treat your clients and employees.
