The short answer: Insurance agencies price on the book: 1.57–2.41× revenue on Peak Business Valuation averages, so a $600,000-revenue independent runs $942,000 to $1.45M, a $300K book $471K–$723K, a $1.2M book $1.88M–$2.89M. The same deals map to 3.18–4.33× SDE. With an SBA 7(a) loan the 10% injection on total project cost is about $90K on a $900K agency, half of it coverable by a standby seller note, so your cash can start near ~$45,000. The premium over other industries buys recurring renewals, if retention verifies.
What insurance agencies actually cost
The book's size sets the price band; its quality sets the position inside it:
| Agency | Revenue | Implied SDE | Typical price |
|---|---|---|---|
| Small book / producer buyout | $300K | ~$120K | $471K–$723K |
| Classic independent agency | $600K | ~$250K | $942K–$1.45M |
| Larger book, platform territory | $1.2M | ~$500K | $1.88M–$2.89M |
Agencies carry one of the highest revenue multiples on Main Street because the revenue renews itself: a retained book pays commissions every year without a new sale. That is exactly what diligence must verify, because a book held personally by the selling principal renews on paper and walks in practice.
How the price is set: the multiple
The revenue multiple is the yardstick, and quality moves an agency across the whole band. On the $600,000-revenue independent:
| Multiple | Implied price | When it applies |
|---|---|---|
| 1.57× (low) | $942,000 | Aging personal-lines book, one dominant carrier, no non-solicits |
| 2.0× (middle) | $1,200,000 | Solid retention, mixed lines, transferable appointments |
| 2.41× (high) | $1,446,000 | 90%+ retention, commercial weight, producers under non-solicits |
Same revenue, a $504,000 swing, driven by retention proof and transferability. See the sourced ranges on the insurance agency multiples data page and the mechanics in valuation.
You are not buying this year's commissions. You are buying the probability that next year's renew without you.
The down payment and the full capital stack
Under SBA 7(a) rules, a change of ownership needs a minimum 10% equity injection, calculated on the total project cost, the price plus financed fees, not on the loan amount. Up to half of it can be a seller note on full standby, and the injection cannot come from borrowed funds. The worked stack on a $900,000 insurance agency:
| Source / use | Amount | % of price |
|---|---|---|
| SBA 7(a) bank loan | $810,000 | 90% |
| Your cash injection | $45,000 | 5% |
| Seller note (full standby) | $45,000 | 5% |
| Purchase price | $900,000 | 100% |
| + Est. closing costs & fees (financed) | ~$30,000 | |
| + Working-capital reserve | $30K–$50K |
The honest cash to close is the ~$45,000 injection plus reserves. The injection is calculated on the total project cost and cannot be borrowed. Lenders finance agencies readily because commission income is documented monthly by carriers, but they will read the same renewal reports you should.
Does the deal cash-flow?
At ~$250K SDE and roughly $126K of annual debt service on an $840K financed total, coverage sits near 2× if retention holds. Model it again at 85% retention before trusting the structure. Check any structure against a DSCR of ~1.15× to 1.25× before you sign anything.
Costs buyers forget
- SBA guarantee & packaging fees, a percentage of the guaranteed amount, usually financed.
- Legal & closing, purchase agreement, carrier-appointment assignments, non-solicit enforcement.
- Carrier re-appointment risk, every appointment must survive the transfer; start the paperwork early.
- Producer retention costs, keeping the people who hold the client relationships may cost bonuses or equity.
- E&O insurance and tail coverage, the errors-and-omissions layer, including the seller's tail.
- Working capital, contingent income is volatile; the buffer carries the agency between carrier payments.
Model your insurance agency deal end to end
Price, down payment, loan payment, and take-home in one place.
Frequently asked questions
Books trade at 1.57–2.41× revenue on Peak Business Valuation averages: $471K–$723K for a $300K-revenue book, $942K–$1.45M at $600K, $1.88M–$2.89M at $1.2M. Retention, mix, and transferability set the position in the band.
An SBA 7(a) purchase needs a 10% equity injection on the total project cost, about $90,000 on a $900,000 agency. Up to half can be a standby seller note, so your own cash can start near $45,000 plus closing costs and reserves.
Because the revenue recurs: a retained book pays renewal commissions every year without a new sale. That durability carries a premium over industries that must resell their revenue annually, and it is why diligence centers on retention proof.
On the total project cost, the price plus financed fees, not the loan amount, and it cannot come from borrowed funds. A seller note on full standby can cover up to half of the required injection.
Sources
- Multiples, Peak Business Valuation, Valuing an Insurance Agency; Acquisition Ace insurance agency multiples.
- Size-band prices derived from the sourced 1.57–2.41× revenue multiple at the stated revenues.
- Financing structure & equity injection, SBA 7(a) program; SOP 50 10 8. See our SBA loan guide.
