30,000 insurance agency owners are retiring with no succession plan. Heres why I think this is the best acquisition opportunity nobody talks about.

Tenth post in this series. Already covered pest control, HVAC, restoration, home care, landscaping, roofing, septic, commercial cleaning, and car wash. Insurance is a completely different thing from all of those and honestly I wish I had looked at it earlier.

No trucks. No equipment to maintain. No worrying about weather. Your entire business is client relationships and the commissions that come with them. And those commissions renew automatically every single year.

Thats the part that blew my mind when I started digging into this. When a client buys a policy thru your agency, the carrier pays you a commission. When that client renews next year you get paid again. And the year after that. Best agencies are keeping 95% of their clients year over year which means basically all of last years revenue is already locked in before January even starts. Ive never seen retention numbers like that in any other industry.

Market size is $261.7B per IBISWorld. But the number that matters more is this one: OPTIS Partners estimates theres somewhere between 25,000 and 30,000 independent agencies under $1.25M in revenue where the owner is getting old and has no plan for who takes over. 89% of new insurance agents quit within the first 3 years so theres nobody coming up behind them. Something like 400K people in insurance are expected to retire by 2026 and the pipeline just isnt there to replace them.

So you have thousands of profitable little agencies with loyal client books that need a buyer. Thats your acquisition pipeline for the next decade.

what buyers are paying

Multiples are pretty straightforward. Small shops under $1.25M revenue go for 2.8-3.2x SDE. The sweet spot for SBA buyers is $1.25M-$5M revenue at 3.2-3.8x SDE. Once you get to $5-10M the PE platforms start looking at you and multiples push to 3.5-4.1x. At $25M+ revenue the big strategic buyers like Gallagher and Brown & Brown are paying 7-9x EBITDA.

Median SDE is around $195K. Median sale price around $650K. So this is very accessible for SBA financing compared to something like a car wash where your looking at $2M+ all in.

The arbitrage between entry multiples and exit multiples is real but maybe not as dramatic as something like landscaping where you buy at 3x and platforms exit at 11-14x. In insurance the gap is more like buy at 3.5x SDE, build to $8M+ revenue, exit at 7-9x EBITDA. Still very good.

PE activity

695 deals happened in 2025 per OPTIS Partners. Thats actually down 12% from 787 the year before. PE backed buyers controlled about 73% of everything. The pool of active buyers is shrinking too, only 95 unique buyers in 2025 vs 104 the prior year.

Hub International did 49 deals. Inszone did 45. BroadStreet led among PE buyers. Gallagher made some big strategic moves acquiring Woodruff Sawyer and AssuredPartners. Brown & Brown grabbed Accession Risk Management.

Even with deal volume declining the OPTIS guys said they expect "more large deals and recapitalizations in 2026 as the chase for scale continues." So the demand side isnt going away, buyers are just getting pickier on valuation.

the thing most people miss about revenue quality

Not all insurance agency revenue is equal and this matters alot for valuation.

Commission revenue on P&C runs 15-25% of premium written. On employee benefits its only 3-6%. But heres whats interesting, theres a shift happening toward fee-based advisory. Instead of just placing a health plan and collecting 4% commission, agencies are charging clients $500-$1K per month as a consulting retainer. Those fees have 40-50% net margins vs 15-20% on traditional commissions.

Agencies that have moved 20-25% of their income to fee-based models are getting a 0.5x-1.0x premium on their multiple. So if you buy a commission-heavy P&C shop at 3.0x and convert a chunk of the benefits business to fee-based advisory, youve potentially added a full turn to your exit multiple just from changing the revenue model. Thats real value creation without needing to grow revenue at all.

The other growth engine is cyber insurance. Ransomware events up 41% per the FBI. Cyber premiums growing 27% CAGR. If the agency your buying doesnt offer cyber risk consulting to their SMB clients, thats $2-5K per client in new revenue sitting on the table.

what to actually check before you buy

The biggest risk in buying an insurance agency is that the owner IS the agency. If they have all the client relationships, do all the selling, and theres no other producer on staff, youre going to lose 20-40% of the book within 18 months of close. Ive seen this happen and its brutal.

So the first thing I'd look at is producer depth. Are there non-owner producers generating at least 40% of new business? Do they have non-solicitation agreements? Can you verify who actually owns the client relationships contractually?

Second thing: carrier appointments. These are literally licenses to sell for specific insurance companies and they dont always transfer automatically in an acquisition. If a carrier decides not to approve the transfer you could lose access to a big chunk of your revenue. Check this early in diligence, not after the LOI.

Client retention: 90% is the industry standard. Under 85% means something is wrong. Over 95% is premium and you should pay up for it.

Client concentration: I'd want no single client over 10% of revenue and the top 5 combined under 30%. One Fortune 500 account leaving your benefits book can crater the business overnight.

Tech stack matters more then I expected. Agencies on modern systems like AMS360 or Applied Epic with automated workflows are running 15-20% lower operating costs then shops still doing everything manually. If you buy a legacy system shop budget $50-150K for modernization.

the labor picture is actually good

This is maybe the nicest surprise vs everything else Ive covered. Turnover is only 14%. Compare that to commercial cleaning (75-200%), home care (79%), landscaping (31%). Insurance people tend to stay once they get established.

Average agent makes $55-65K. Account executives $110-140K. Not cheap but manageable and way more stable then trying to keep $17/hr caregivers from leaving for Costco.

The catch is that recruiting new producers is expensive and slow. $75-125K all in when you include training costs and the ramp period. And 89% of new agents dont make it past 3 years. So if you buy an agency with experienced producers already in place, thats worth a premium because replacing them is painful.

where I'd look

Dallas-Fort Worth is probably the strongest market right now. No state income tax, $8.2B in P&C premium volume, cyber adoption is high. Phoenix and Atlanta are strong too. Charlotte and Raleigh are interesting because competition is lower and both metros are growing fast.

I'd avoid San Francisco (valuations inflated 20-30%, operating costs are insane), NYC (no license reciprocity, compliance costs 40% higher then national avg), and LA (market saturation, wildfires destroying carrier relationships, agent wages running $75-95K vs $55-65K everywhere else).

the math

$1.5M revenue shop, $150K SDE, buy at 3.5x for $525K. SBA 7(a) at 90% LTV so your out of pocket about $52K. After debt service your taking home around $85K year one plus whatever salary you set. Grow organically 7-10% per year which is below the best practices benchmark of 10.7%. By year 3 cash flow is $140K. Exit at 4.0x SDE in year 5 for around $820K. Call it a 28-29% IRR.

Honestly not the highest IRR Ive modeled across these industries but the risk is way lower. No weather risk, no material cost volatility, no 79% turnover, no $150K vacuum trucks to replace. The cash flows are just incredibly predictable.

risks I'd flag

P&C rates are softening right now. Down 8-10% on preferred risks per Aon. That directly compresses your commission revenue unless you offset with volume growth or specialty lines. Combined ratios are trending toward 99% which means carriers are barely profitable and could start tightening appointments or cutting contingent commissions.

Climate CAT losses are exceeding $100B a year now which stresses carrier relationships especially in Florida and coastal markets. If your agency is in a CAT-prone area, check how your carrier partners are handling it because some are pulling out of entire states.

And the talent pipeline is genuinely thin. 50% of the workforce approaching retirement, 89% new agent attrition. This is both a risk and an opportunity, its what creates the acquisition pipeline but it also means staffing the agency post-acquisition takes real investment.

bottom line

Insurance agencies have the stickiest recurring revenue model in small business. Period. 90-95% client retention, 26% EBITDA for top quartile, no trucks or equipment, low turnover. The 30,000+ agencies needing perpetuation means the acquisition pipeline is deep and will last a decade. Entry multiples are fair at 3.2-3.8x SDE. The value creation play is converting to fee-based advisory and adding cyber lines. PE controls 73% of deals proving institutional demand for the asset class.

If you can get past the fact that selling insurance isnt as sexy as owning a car wash or a pest control route, the risk-adjusted returns are probably the best Ive seen across ten industries.