Insurance Agency Valuation: Why Multiples Can Be Misleading

When insurance agency owners think about selling, one of the first questions we hear is:

“What multiple could I get for my agency today?”

It’s a fair question.

You want to know how your business stacks up against peers in the market. But here’s the truth: multiples alone don’t tell you what your agency is worth. In fact, focusing on them without context can be dangerous.

What Insurance Agency Owners Ask About Multiples

It’s common to hear things like:

• “Jim got 4x for his agency.”

• “Rachel sold for 8x.”

  
  

These numbers float around the industry and naturally spark curiosity. But without digging deeper, they can create a false sense of value.

Why Multiples Alone Don’t Tell the Full Story

Multiples are just a shorthand way to describe deals. They don’t reflect what really drives valuation.

The most critical factor? Profitability.

Without knowing how profitable your agency is, those multiple numbers don’t mean much.

The Role of EBITDA in Insurance Agency Valuation

A standard way to measure profitability is EBITDA (earnings before interest, taxes, depreciation, and amortization).

EBITDA gives buyers a clear picture of operating profit, and it’s the number multiples are applied to.

A Real Example: Jane vs. Joe

Let’s compare two owners:

• Jane sold her agency for an 8x multiple.

• Joe sold his agency for a 12x multiple.

  
  

At first glance, Joe’s deal seems better. But here’s the catch:

• Jane’s EBITDA margin was 50%.

• Joe’s EBITDA margin was 25%.

  
  

Even at a lower multiple, Jane walked away with millions more than Joe because her business was more profitable.

What Insurance Agency Owners Should Really Be Asking

Instead of fixating solely on the multiple, insurance agency owners should be asking questions like:

• How does my profit margin compare to industry norms?

• What steps can I take to increase my profitability before selling?

• With my current growth rate, what would be considered a healthy margin?

  
  

These are the levers that truly impact what your agency is worth.

The Takeaway

Multiples make for interesting conversations, but they don’t define your agency’s value. Profitability does.

If you’re thinking about selling, or just want a clearer picture of where your business stands, start by looking at your numbers, not someone else’s multiple.

✅ Curious what your agency is really worth?

Legacy Advisors helps insurance agency owners prepare for sale, understand their valuation drivers, and maximize outcomes.

👉 Schedule a confidential consultation today.

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.