Decoding the Multiple: Why Comparing Agency Sale Numbers Can Mislead You

A common point of discussion – and often confusion – for insurance agency owners considering selling their business revolves around the sale multiple.

It's natural to hear stories of agencies selling for 8x, 10x, even 12x EBITDA and wonder how your own potential offers stack up. However, directly comparing the multiple you might receive to what someone else reported can be incredibly misleading.

The reported EBITDA multiple is often a result of the past, a consequence of numerous factors unique to each transaction.

Think about it...

Heard Someone Got 12x for Their Agency? Here's What That Really Means

If a fellow agency owner—let’s call him Jimmy—tells you he sold for 12x EBITDA, that’s fantastic news for Jimmy. Celebrate his success!

But here’s a reality check: don’t rush to benchmark your situation against his.There’s no such thing as a true apples-to-apples comparison in this space.

Let’s break down a real scenario.

One agency received three different offers, each with the same guaranteed upfront payout: $10 million. But the implied EBITDA multiples in the Letters of Intent (LOIs) told very different stories:

• Buyer 1: 8× EBITDA based on their pro forma adjusted earnings

• Buyer 2: 12× EBITDA based on trailing twelve-month EBITDA (no adjustments)

• Buyer 3: 15× EBITDA by including future earn-out potential and equity appreciation

✅ Same agency

✅ Same guaranteed cash

🚨 Three very different multiples

Why Multiples Alone Can Be Misleading

This example shows why fixating on a single number—especially someone else’s—can be a trap.

Each buyer may calculate and present their multiple differently:

• Adjusted vs. unadjusted EBITDA

• Inclusion (or not) of earn-outs

• Projected vs. trailing performance

• Equity value assumptions

Focus on What Really Drives Value

Instead of chasing the highest multiple you've heard, focus on the fundamentals of your own deal:

• What are your profit margins?

• How strong is your cash flow?

• What's the guaranteed upfront portion?

• How is the earn-out structured, and what needs to happen to achieve it?

• Is there equity involved, and how is it valued?

These are the pieces that actually shape your financial outcome—not just the multiple slapped on the LOI.

Stay Grounded in Your Own Goals

At the end of the day, selling your agency isn’t about beating someone else’s number—it’s about securing the right deal for you.

• Is the buyer the right long-term fit?

• Are the deal terms aligned with your exit timeline and risk tolerance?

• Does the structure give you the flexibility or freedom you want post-close?

  
  

A big number can be exciting. But real value lives in the details.

Legacy Advisors is the only M&A advisor dedicated solely to sell-side insurance deals. 

With a team comprised of successful ex-agency owners and experienced private equity investors, Legacy Advisors was founded on the mission of helping agency owners make more confident decisions in their journey to a sale.

Most clients begin with an introductory call to ask general questions, discuss market trends, and learn more about our process. If it makes sense for both parties, we then offer business valuations at no charge.