The independent insurance agency (IA) system is in the midst of a significant evolution. In a recent conversation between industry leaders, experts from across the country weighed in on where the IA market is headed, what’s driving M&A activity, and how agencies can better position themselves for growth or exit. Among the featured voices were Jeff Smith, Craig Niess, and Jarod Steed of IA Valautions, Scott Freiday of InsurBanc, and Andrew Maisano of Unison Risk Advisors. Their insights offered a clear, data-backed look at the health of the IA system and the shifting strategies within it.
A System in Maturity, Yet Ripe with Opportunity
The IA system, once considered fragmented and traditional, is now transitioning through its maturity phase, with substantial consolidation reshaping its structure. Jeff Smith opened the discussion by placing the system somewhere between maturity and growth, citing recent data showing a gradual decline in agency numbers followed by a surprising 10% increase in 2022. However, the current figure sits around 39,000 agencies – still strong, but reflective of the barbell effect: a growing concentration of small and large agencies, with fewer in the middle.
Scott Freiday, Division Director at InsurBanc, echoed that sentiment, noting, “We’re seeing more and more agencies on the smaller to mid-size range entering the market, while larger agencies are behaving more like private equity groups.”
Andrew Maisano, who leads corporate development and M&A at Unison Risk Advisors, added a critical perspective on the market’s progression: “It’s a regenerative industry. We’re seeing small agencies take on more professional structures and growth strategies. There’s a real shift away from lifestyle businesses to performance-driven operations.”
M&A: From Frenzy to Focus
While headlines have pointed to a decline in M&A activity, down roughly 15% year-over-year, industry insiders aren’t reading that as a slowdown in interest. Instead, the narrative is shifting from quantity to quality.
“Just putting up high acquisition numbers is no longer enough,” said Maisano. “The focus is now on organic growth and strategic fit. There’s a flight to quality.”
Mega-mergers like those involving McGriff, NFP, and Woodruff saw valuations in the range of 17x EBITDA, showing that buyers are still willing to pay top dollar – but only for high-performing, well-integrated firms. Mid-market agencies with annual revenues between $15 million and $50 million have become scarce and increasingly attractive.
Freiday offered a lending perspective, noting that while some capital is still waiting on the sidelines due to interest rate uncertainty, the fundamentals remain strong: “We continue to see healthy demand, especially in the unannounced deal space. There’s a lot of dry powder out there.”
Both experts predict a pickup in M&A activity in late 2025, as confidence returns and interest rates stabilize.
What Buyers Are Really Looking For
M&A success now depends on more than a clean book of business. Culture fit, operational efficiency, and talent retention have become top priorities.
“We’re buying people and relationships, not just revenue,” said Maisano. “If the key producer is retiring immediately, that’s just buying a revenue stream and hoping it sticks. That’s a risky bet.”
Freiday added, “We look at how the acquisition improves the profitability, access to markets, and long-term growth potential. A younger, hungrier producer adds enormous value to a deal.”
The Realities Behind Valuations
Agency owners often reference eye-popping valuation multiples seen in headlines, sometimes north of 15x EBITDA. But experts warn against assuming those numbers apply to smaller, main-street shops.
“There’s a difference between a $5 billion revenue firm in a major metro and a $1 million agency in rural Midwest,” Said Craig Niess of IA Valuations. “Multiples are at an all-time high, but so are buyer expectations.”
Internal perpetuation remains a common succession strategy, but it typically yields lower valuations than external sales. Still, the internal values have risen in line with the broader market due to heightened demand.
Maisano shared a key observation: “There’s less interest in firms that aren’t growing or planning for the future. Talent and scalability are the new currencies in this market.”
Advice for Owners Considering M&A
For those looking to sell or acquire, planning is critical. Smith stressed the importance of starting early: “If you’re 65 and looking to sell next year with no succession plan, you’re offering revenue, not value. That’s a tough pitch to today’s buyers.”
Maisano emphasized that demonstrating growth capability and operational sophistication can elevate even small agencies to premium valuation status: “We’ve seen $6 million firms sell at 15x EBITDA because they consistently grow 30% annually and have a repeatable process.”
He added that key-person risk is a major red flag: “Remove the narrative that your agency is just about you. Buyers want to see scalable, team-driven success.”
Freiday added a practical note for owners pursuing internal perpetuation: “There are flexible options – staged equity sales, seller notes, bank financing. But value still depends on performance and growth trajectory.”
Final Thoughts: Growth Through Vision
M&A in the IA space is no longer about transactions alone. It’s about building value, integrating culture, and planning for the future. Whether you’re a $250,000 agency or a $10 million firm, the key drivers are the same: professionalism, vision, and people.
“Those who grow with intent,” Maisano concluded, “will always find a market.”
By: Colleen Barbara, Marketing & Communications Manager for IA Valuations and OIA
IA Valuations is a DBA of the Ohio Insurance Agents Association.
This article was written using a transcript from an IA Valuations Webinar titled “Independent Agent 2025 M&A Trends and Predictions and with the assistance of ChatGPT.
About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 270 valuations to independent insurance agencies across the U.S. Our advisors have 25+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process. Agency Link is a platform that connects buyers and sellers together to further the growth and strength of the IA system. To learn more about IA Valuations, please visit IAValuations.com or contact@iavaluations.com.
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