Given the massive number of M&A transactions in the IA system over the past decade, it has created an abundance of misinformation about the M&A environment for independent agency owners. In an effort to clear up some of the misconceptions, we are going to engage in a game of two truths and a lie.
Truth #1
The Independent Agency (IA) system is undergoing massive consolidation and an unprecedented wealth transfer. Macro-economic forces are causing agency owners to transition ownership every year. These forces include:
- Aging principals: 37% of agency principals are over 61
- Record-high agency valuations: 42% increase in 8 years
- Billions of dollars of investments being infused into the IA system: estimated $85B invested or available for investment
- AI-fueled technological uncertainty
According to Optis Partners, there have been 7,633 M&A agency and broker transactions since 2016. To measure the increase in M&A activity, we looked at 5-year increments; from 2013 to 2017, there were 2,161 transactions, and from 2021 to 2025, there were 4,455. That represents a 106% increase in M&A transactions over those 5-year time frames. While the M&A market has cooled off from its peak in 2021 (33% decrease), we are still in an environment with a bounty of hungry buyers and a decreasing number of sellers.
Truth #2
Agency values are at record levels. According to IA Valuations’ data, the average EBITDA valuation multiple is 8.5 across all combined revenue categories, and the revenue multiple in an external sale is 3x regardless of the profile of an insurance agency. Agency values rose another 8.7% in 2025.
Agencies are realizing higher multiples in large part because of the recent revenue growth from the hard market (10.9% C&F growth), the attractiveness of the recurring revenue model for insurance agencies (average retention rates of 90%+), and the high profit margins they operate on (average 27% EBITDA profitability margin).
The Lie
The lie is that Private Equity (PE) and publicly traded brokers are responsible for the majority of the M&A transactions in the market. While it is true that PE and publicly traded brokers are responsible for 72% of the publicly reported transactions that make headlines in insurance trade journals, this percentage does not reflect the actual number of M&A transactions. These buyers and acquisitions get all of the attention because they are the only ones putting their M&A activity into trackable press releases and outlets.
The truth is, the headlines are only half the story. According to IA Valuations data, 72% of ownership transitions in 2025 were between privately held retail insurance agencies, which includes a split between internal perpetuations and external sales to friendly retain agency competitors.
This should be encouraging for every aspiring agency owner and entrepreneur thinking about entering the IA space. Despite all the recent M&A activity in the past 10 years, there are still approximately 39,000 independent agencies, according to the 2024 Agency Universe Study, and retail agency ownership transitions far outnumber the PE/public broker transactions.
Whether you are planning to buy, sell, or hold, the key takeaway from this article should be to have a plan, execute the plan, and ignore the noise. Just because your agency peer is sold or is selling, does not mean that you should. Build a plan and run your own race.
By: Jeff Smith, JD, CIC
Jeff Smith, JD, CIC, CAE serves as Chief Executive Officer for Ohio Insurance Agents Association (OIA) and IA Valuations. He is responsible for leading the organization’s strategic initiatives and day to day operations. As CEO of IA Valuations, Smith has consulted and reviewed over 400 agency valuations for independent agents across the US. Smith provides insights into the agency’s operations, risk factors and legal guidance on how to perpetuate and maximize value in a sale.
Smith graduated with honors from Kent State University and Capital University Law School with a concentration in government relations. He is a licensed P&C insurance agent, Certified Insurance Counselor Designee, Attorney and Certified Association Executive. Smith is an active member of the Ohio State Bar Association Insurance Committee, Ohio Society of Association Executives and Ohio Lobbying Association. He also served on the Village of Marble Cliff Council and as Chairman of the Board of Trustees for the Sequent Midwest Business Health Fund.
About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 400 valuations to independent insurance agencies across the U.S. Our advisors have 30+ 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.
The information provided in these documents is general in nature and shall not be construed as personal legal, tax or financial advice for your situation. Please contact@iavaluations.com to discuss your personal situation.
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