Is the M&A Environment Good or Bad for Your Agency?

• June 17, 2026

By Jeff Smith

The independent insurance agency system has been in a period of prolonged consolidation for the past 30 years, with no signs of a real slowdown. According to the 2024 Agency Universe Study, the number of independent insurance agencies has declined by 12% since 1996.

While there was a 10% increase in the number of agencies in 2022—a temporary COVID bump—the independent agency system has lost 18% of its agencies through 2020. Further, due to continued consolidation, we may see another 1,000 to 2,000 agencies lost when the next Agency Universe Study is published later this year.

A major driver of the decline in the overall number of agencies is the robust mergers & acquisitions activity we have experienced, particularly over the last 10 years. Since 2016, there have been 7,635 publicly reported M&A transactions in the independent agency system, according to Optis Partners.

The question is: Is the M&A environment good or bad for the independent agency system and your agency? In short, that answer largely depends on the position you occupy in your agency.

If you are a 58-year-old agency owner, you are in the modern-day independent agency gold rush. According to IA Valuations data, the average EBITDA valuation multiple is 8.5x for all combined revenue categories and the revenue multiple in an external sale is 3x regardless of the profile of your agency.

In our experience, we have seen low-growth, paper-file, heavily concentrated personal lines agencies without a perpetuation plan sell for the aforementioned multiples in this market. For now, that is the new marketplace floor, and if you are selling for anything less, you are not doing your homework and cheating yourself out of your hard-earned dollars.

In the past eight years, the average insurance agency EBITDA valuation multiple has risen 42%, according to IA Valuations data. Therefore, if you owned an agency in 2018 and maintained your book of business at stable levels, your agency is likely worth 42% more due in part to the insatiable demand for M&A in this market.

Valuations continue to reach record-high levels year-over-year, up 8.7% since 2025. Therefore, it could not be a better time to own an independent insurance agency if you are in the later stages of your career, looking to sell your agency and are willing to work for a few years before retirement.

However, if you are an aspiring agency owner or an inexperienced acquirer in a privately held retail agency, the outlook is not as favorable. The cost to become an owner has never been higher.

There are no deals in this market. Sellers have countless options and are well aware of the value of their agency, so if you want to acquire their business, you will pay top dollar, whether pursuing an internal perpetuation or an external acquisition.

In addition, due to the influx of private equity (PE)-backed buyers, privately held retail agencies’ ability to compete for acquisitions has become incredibly difficult. PE buyers are offering deals that include lucrative cash down payments, equity in the enterprise entity, generous salaries to stay and employment for the whole staff. These offers are quite enticing and are even causing family-owned agencies to reconsider plans to perpetuate to the next generation.

So, is it good or bad? Well, two things can be true at once. For some, it is the best of times; for others, it is the worst of times. That is the state of the independent agency system at the moment.

Jeff Smith, J.D., CIC, CAE, is CEO of IA Valuations and the Ohio Insurance Agents.