How to Prepare Your Insurance Agency for Sale — Before You Announce Your Intent

Follow these five steps to secure a smoother deal and a stronger valuation.

Selling your insurance agency is one of the most significant decisions of your career. While your eye may be set on the final prize, the real work begins long before you announce your intent to sell. From cleaning up your finances to streamlining operations and identifying potential buyers, thoughtful preparation can make all the difference in protecting your business and maximizing its value.

Here are five essential steps to prepare your agency for sale before you go public with your plans.

1. Start with a Financial Review

The first step in preparing your agency for sale is to get your finances in order. Buyers want a clear picture of your agency, beginning with several years of clean financial statements, including profit and loss reports, balance sheets, debts, and tax returns.

Beyond the basics, you should be prepared to provide:

• Revenue by carrier and line of business
• Commission statements
• Expense reports
• Producer compensation and performance data
• Year-over-year revenue growth
• Retention rates
• Book of business analysis

This is also the time to eliminate any personal expenses that may have been running through the business and to evaluate whether marketing or carrier relationships could be streamlined.

Ultimately, buyers expect your numbers to support the valuation you’re asking for, whether that’s a flat figure or a multiple. A clean, transparent set of books signals a disciplined and well-managed operation.

If you’re not sure where to start, consider bringing in a financial advisor or consulting firm experienced in agency sales. An outside perspective can highlight your strengths, flag weaknesses, and help present your agency in the best possible light.

2. Evaluate Your Operations and Structure

Buyers aren’t just purchasing your book of business; they’re investing in the systems, processes, and people that keep your agency running. The more turnkey your operation is, the more attractive it will be.

Start with the fundamentals:

• Review and update carrier contracts to ensure they are current and transferable.
• Consider consolidating business with core carrier partners to strengthen relationships and maximize contingency bonuses.
• Update HR documentation and clarify staff roles.
• Create standard operating procedures for key workflows so your team can handle day-to-day operations without heavy reliance on you.
• Ensure your AMS/CRM is up to date, with clean and transferable data.

In short, the goal is to make sure your agency can run smoothly without you, which signals stability, reduces perceived risk, and can boost your agency’s value.

3. Research the Market and Potential Buyers

Before you list your agency, it’s important to understand the broader M&A landscape and the buyers you may engage with.

Industry sources like The Big “I” (Independent Insurance Agents & Brokers of America) and Agency Equity provide benchmarks for agency valuations and recent transaction data. Smaller agencies typically sell for 1-2 annual revenue, though strong financial performance, professional presentation, and solid preparation can push valuations higher.

For mid-sized and larger firms, buyers often shift to EBITDA-based valuations (earnings before interest, taxes, depreciation, and amortization). According to Merger & Acquisition Services, agencies earning under $2 million typically sell for 8-10 EBITDA, while those generating more than $5 million can reach 12.5-14.5.

It is equally important to evaluate the buyers themselves. Some may present attractive stock options or incentive packages, but always verify their claims and avoid over-optimistic projections. Also, consider how each buyer will treat your staff, especially if you want a buyer who will retain your employees rather than cutting or consolidating.

4. Ask the Question: What Happens After the Sale?

When you’re swept up in the excitement of selling, one of the most overlooked questions is: What happens after the sale?

Beyond the payout, think about your role, your team’s responsibilities, and the agency’s identity. Will you stay on for a transition period? How will staff be treated? Will your agency’s legacy remain intact?

If your vision and the buyer’s vision don’t align, the deal may look good on paper but unravel later. Much like a marriage, the relationship requires shared values and expectations. Don’t be afraid to walk away if the fit isn’t right. Asking tough questions up front protects your team and your reputation.

5. Get Expert Help

Selling an insurance agency is complex, but you don’t have to navigate it alone. There are many avenues to get help, including your insurance network if you’re part of one. Networks often provide valuation tools, buyer connections, and insight into what makes a deal work. In some cases, selling within your network may even come with added benefits.

When you’re preparing to sell and seeking expert help, it’s important to retain confidentiality, as announcing your plans too early can unsettle staff, carriers, and competitors. Experienced M&A advisors, consultants, and networks can handle a lot of the heavy lifting for you–compiling loss runs, financial reports, NDAs–while keeping the process discreet.

6. A DNA Match-Up

Ultimately, when preparing to sell your agency, finding a buyer with complementary DNA is crucial. Consider the company culture, the type of business they focus on–commercial, personal, or both–and whether the buyer is an individual or a company. Look closely at their carrier lineup and overall approach.

The best deals aren’t just the most lucrative; they’re the ones that protect your team, preserve your legacy, and ensure a smooth transition. With clean books, strong processes, and early planning, you can position your agency for a sale that feels just right–both financially and strategically–when it’s finally time to sign on the dotted line.