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Selling an Insurance Agency: Price vs. Equity

“What number can I expect to see on the check?” is the most common question that we get from owners considering selling an insurance agency. Price, however, is not the only consideration - contemporary deals also include additional considerations, like equity and overall deal structure, to determine what a business owner will actually get from a completed M&A transaction.

This article seeks to cover the two most significant bases of selling an insurance agency - price and equity - to offer readers a more holistic sense of a positive deal structure.


Price, usually referred to as payout, refers to the cash sum that an insurance agency seller walks away with following the conclusion of a successful M&A transaction. Contrary to popular understanding, this payment does not take a singular form, but changes depending on the nature of the overall deal structure. The sections below offer descriptions of the three most common types of payments when selling an insurance agency: payout, earnout, and financing.


When you hear an M&A professional talk about a payout, they are typically referring to a lump sum. This is what most sellers typically imagine when they consider the price of their insurance agency: a set amount of money paid out all at once upon closing. Because a payout entails the biggest expense for buyers, these – out of all possible payment options – will often land an insurance agency seller the least amount of money. This is the natural consequence of getting an immediate payout. 

The exact amount a seller might get in a payout when selling an insurance agency varies depending on the size and makeup of the agency in question. For example, consider the list below with payout estimations using standardized revenue and EBITDA generalizations for small, mid-size, and large insurance agencies:

Payout Estimates for Insurance Agencies







$100M - $10B







$200k - $25M


EBITDA Multiple





$330k - $4.2M

$1.2M - $187.5M


To repeat, these are estimations; even so, these numbers can vary wildly depending on the relative size of your agency, as well as what overall deal structure buyers accept. There are few, if any, buyers out there who will immediately agree to purchase your agency outright for billions of dollars.  


Earnouts are a significantly more common deal structure in modern M&A when it comes to cash payments. Earnouts are milestone- or timeline-based arrangements in which the buyer agrees to provide several payments over time as agreed-upon goals are met. These goals might include: 

  • A pre-arranged timeframe (i.e., quarterly or annual payments) 

  • Payments following growth in the company’s revenue

  • Payments following changes in the company’s internal structure (i.e., department resizing, management succession) 

Whatever the terms, both parties close on the deal upon understanding and agreeing to those terms. It’s common to see deals completed in which earnouts make up the lion's share of payments to sellers.


Financing is an option that provides insurance agency sellers the least amount of upfront cash, but usually ends up yielding the highest payment over time. Financing allows buyers who are short on liquid funds to purchase an insurance agency for a limited upfront payment in exchange for continued payments over time, with interest. The interest rate itself varies considerably, depending on the type of financing and the deal itself, but it generally breaks down as follows: 

The Most Common M&A Financing Options



Risk Level

Average Interest Rate


The seller provides financing directly to the buyer




A bank or financial institution provides financing close to market rate




Financing provided by private 3rd parties (e.g., private equity firms, specialized mezzanine funds, high net-worth individuals)




3rd party financing arrangements in high-risk industries with uncertain cash flows



Financing was very much in fashion for M&A several years ago, and we still see it fairly often in the contemporary M&A market. It’s a bit less common than it used to be, however, given the significant amount of dry powder on which today’s prospective buyers are standing. 


When selling an insurance agency, price used to be the end-all, be-all discussion. In the modern market, however, equity is quickly becoming king. Just over the last four years, Sica | Fletcher has observed this trend continuing to the point where it makes up the majority of most deals in the modern market. 

So why equity? It has positive implications for both buyers and sellers: 

  • Buyers see equity as a means to purchase a company for relatively little compared to what they would have paid several years ago. It provides sellers with additional options down the road should the company grow, but of course, this benefits them as well – because growth will simply improve the company’s position. 

  • Sellers see equity as an opportunity to a.) stay invested in their company post-closing, and b.) receive additional funds as a shareholder while the company grows. This is especially beneficial for insurance agency sellers who truly believe in their companies and are looking for the highest possible payout.

Equity, however, isn't a foolproof option in every deal. Any time a seller considers a deal structure made primarily of equity, they need to ask themselves two questions:

“Whose Equity? How Is That Equity Valued?”

Often, we see buyers offer equity in their company as a form of payment. The value of that offer becomes difficult to measure, however, when dealing with buyers who own private businesses. 

In the case of a public buyer, the value of that equity is easily measurable; simply go online and see how much their stock is worth, do some basic math, and decide if what they are offering is worth your agency. In the case of private buyers, however, the conversation becomes decidedly more complicated. 

Take the example below, with details from two buyers: 

Company A

Company B

# Shares Offered



How Is the Stock Valued?

“We value it ourselves”

Discounted Cash Flow (DCF)

In this case, working with company B is likely going to be a better deal when selling an insurance agency. Price aside, knowing the actual value of company B’s stock provides the seller with a better understanding of what they are actually getting for their company, whereas company A’s offer is far more uncertain, despite it being “larger.”

Selling an Insurance Agency? Price Isn’t the First Question

We should note that there are some additional considerations that agency owners should consider when selling an insurance agency. Price and equity should be at the forefront of your mind, but the payment timeline, who gets paid in what order, as well as the overall deal structure should be at the forefront of your mind when you start considering selling your company.

All that is to say that selling an insurance agency is a difficult process that requires a great deal of expertise. Our team has spent several decades developing that precise expertise, helping business owners sell their insurance agencies for the best possible payout. Reach out to our founders using the contact information below if you'd like to discuss next steps.

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 agency 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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