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EBITDA x5: A Quick Insurance Agency Valuation Rule of Thumb

Updated: Apr 30

Disclaimer: The article below contains a quick and easy method for calculating the ballpark value of an insurance agency using standardized market information. Readers should note that the actual value of your insurance agency may vary considerably from what this estimate might provide. We strongly recommend that you speak with a reputable M&A advisor before running an M&A deal process. Nothing herein is intended to constitute financial or legal advice or a recommendation to buy or sell a business or other investment products.

Insurance agency valuation is a critical component of running an M&A deal, but executing this multi-step process well requires a great deal of specialized education and experience. In addition, getting the valuation process started demands a hefty bill and entails poring over extensive documentation for several weeks.

For a more comprehensive description of the insurance agency valuation process, we recommend consulting our guide, Insurance Agency Valuation 101, for a thorough understanding of the essentials. In this article, however, we provide agency owners with a quick and easy way to get a rough estimate of their agency’s worth. We call this approach, based on years of experience, “EBITDA x5.

Why It Works

More than 90% of the M&A deals we have observed for insurance agencies are calculated through some multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization). EBITDA is preferred for insurance agency valuations as a rule of thumb because it accurately represents the profitability of an agency over time by removing the operational expenses associated with running it.

Understanding EBITDA as the selected model is only half of our ballpark estimate equation; the other half is the multiple itself. Over the last several years, insurance agencies have, on average, sold at between 5-7x EBITDA. This means that when an insurance agency valuation is complete, the final number typically falls somewhere between 5 and 7 times their total EBITDA. 

How To Calculate

So, now that we understand the components of this calculation tool, let’s apply it together. The formula to calculate your insurance agency value estimate (IAVE) is:

IAVE = (Earnings -Operating Expenses + [Interest + Taxes + Depreciation + Amortization]) x 5

Take, for example, an insurance agency that makes about $5M in revenue every year but has an annual spend totaling $2.6M.. This agency’s EBITDA would look something like this: 

Example EBITDA Calculation





Operating Expenses


Interest (between 1-3%)

+ $150,000

Taxes (between 10-15%)


Depreciation (between 1-5%)


Amortization (between 1-5%)




From here, applying the rest of the formula is as simple as multiplying the resulting EBITDA by 5: 

$3,630,000 x 5 = $18,150,000

As we mentioned earlier, agencies usually sell between 5-7x EBITDA, so multiplying this number by 4-8 can give you a better idea of the high and low ends of your possible valuations.

$3,630,000 x 4 = $14,520,000

$3,630,000 x 5 = $18,150,000

$3,630,000 x 6 = $21,780,000

$3,630,000 x 7 = $25,410,000

$3,630,000 x 8 = $29,040,000

Based on our formula, the average spread for this insurance agency is between $14-30M, with a median valuation of $21.7M. When using this insurance agency valuation rule of thumb, we recommend a more conservative estimate that uses a lower multiple of 5 rather than 6. Larger or more profitable firms, however, may be closer to the higher estimates.

Exceptions to the Rule

We have to stress again that the insurance agency valuation rule of thumb presented here will not necessarily reflect the value of your specific insurance agency. A full insurance agency valuation considers a much wider range of factors, which we explain in further detail in our Insurance Agency Valuation 101 guide. 

Even without getting into those specifics, however, it’s important to consider that: 

  • The AVERAGE multiple is between 5-7x, but multiples vary. A variety of factors can affect your EBITDA multiples, including company size, operational spend, taxes, and more. You can find more accurate reports on where EBITDA multiples for insurance agencies sit in 2024, but the best move is to consult an advisor for a more personalized estimate.

  • EBITDA is USUALLY used to value insurance agencies, but not always. A small portion of M&A transactions are conducted on a multiple of revenue in total, and an even smaller portion uses Seller’s Discretionary Earnings (SDE) to calculate value. Depending on the agency's specifics, one of these options may be a more appropriate valuation model.

The Most Important Insurance Agency Valuation Rule of Thumb? Consult an Advisor

Although the EBITDA x5 rule isn’t universally applicable as an insurance agency valuation rule of thumb, it is designed to provide insurance agency owners with a rough ballpark figure of how much their insurance agency might be worth. For more detailed information, we recommend reading through Insurance Agency Valuation 101, which provides a more comprehensive description of how buyers value insurance agencies.

Moreover, we strongly recommend speaking with an M&A advisor. The particular ins and outs of insurance agencies could result in actual valuations that are wildly different from this ballpark estimate, which means you could end up leaving millions of dollars on the table. To get started, reach out to us using the contact information below.

About Sica | Fletcher:  Sica | Fletcher is a strategic and financial advisory firm focused exclusively on the insurance industry. Founders Michael Fletcher and Al Sica are two of the industry's leading dealmakers who have advised on over $16 billion in insurance agency and brokerage transactions since 2014. According to S&P Global, Sica | Fletcher ranked as the #1 advisor to the insurance industry for 2017-2023 YTD in terms of total deals advised on. Learn more at

Contact: Mike Fletcher

Managing Partner, Sica | Fletcher


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