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Strategy Is the Game-Changer in Insurance Agency Valuation

At some point, every insurance agency or broker considers perpetuation planning for their leadership, relationships, and ownership internally or for selling their business. Do you have a strategic plan in place to drive value for your firm?
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strategy is the game-changer in insurance agency valuation

Insurance agency valuation is not as complicated as it seems. Today's dynamic insurance market is ripe with buyers looking for opportunities to acquire agencies, inspiring some owners to ask the question: What is my insurance agency worth?

The answer is not so simple. Certainly, the acquisition market in the insurance industry continues to offer the confidence to proceed with an exit plan that ends with an external sale. But there's a bit of an optical illusion with the buying activity versus an agency's true value. The prices you hear may not equal the value of your agency. And value is a variable number: It's a math equation with lots of factors, including whether buyers are internal or external.

So, why is valuing your insurance agency important? Firms can improve their business operations and make the most of today's market, whether that means capitalizing on opportunities to sell to forthcoming external buyers, or improving organic growth to create more value internally so the business can profit and perpetuate.

Leverage Your Insurance Agency Valuation to Get What You Want

The first step in succession planning—whether to sell externally or perpetuate internally—is to define your strategy. Do not allow a valuation to drive your decision. Instead, determine what path you want to take your agency, set the end goal and then create a plan to maximize the value of your firm. After that, consult a trusted insurance agency advisor to help maximize the valuation of your firm for your benefit.

Do some soul searching and consider what you actually want to do with the business. Do you hope to perpetuate the agency internally and pass on the legacy to another key leader or family? Do you want to maximize the return on a sale to an external buyer and “cash out"? Recognize, you'll likely still be involved during the ownership transition—selling to an outsider doesn't usually mean collecting a check and walking out the door.

Strategy Is the Game-Changer in Insurance Agency Valuation 

The best method for insurance agency valuation begins with having the right growth strategy in place. Take a good hard look at where your business operations stand today. As MarshBerry notes, “If you run your agency like it is for sale, you win whether you sell internally or externally." What are you doing to drive profitable growth? Are you challenging your people to improve production? Do you have a sales culture? Are you actively engaging leaders in ways for them to acquire ownership? Is there a plan so they can acquire stock, or are you holding on to the lion's share, resistant to sell it?

Asking these critical strategy questions is important because your firm will likely not get the valuation you hope for if everyday business operations are on autopilot. If your goal is to maximize agency value—and it should be—then you first must look inside and make business changes to improve profitability, sales performance and recruiting, all of which will help grow the value of your insurance agency.

Taking the Next Step

With a pool of willing buyers casting lines in the insurance industry today, agency owners are wise to ask: How is a fair market value determined? What factors play into the price a buyer will pay? 

The valuation of your insurance agency depends on whether or not you truly know its value. Your predetermined strategy becomes the game-changer in the value of your insurance agency. If you dedicate time and resources to improving your growth and business operations with a mind toward its long-term health and success—and not just how it looks on paper—then its value will escalate.

Attend the MarshBerry 360 Forum 

If you're an agency or brokerage owner looking to understand the value of your agency and drive organic growth join MarshBerry at the 360 Forum in New York, Chicago or Las Vegas this May. During this one-day event, you'll chart your path for success in 2023 by understanding the full view of insurance industry merger & acquisition market trends and organic growth best practices. View the full agenda and register at

Strategy Is the Game-Changer in Insurance Agency Valuation

Monday, May 8, 2023
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