Misperceptions about agency values & private equity buyers

The result of the increased M&A activity and PE buyers has helped drive agency values higher and created a significantly broader marketplace for buying and selling independent insurance agencies. While the rising tide has lifted all IA “boats,” how high each agency has been lifted varies greatly based on its profile and performance. (Credit: wladimir1804/Adobe Stock)

The private equity (PE) infusion into the independent agent (IA) system is a fairly recent phenomenon that has created a fundamental realignment of the IA business model. It has also created an unprecedented amount of myths and misperceptions about agency values and selling options.

With estimates of $25 billion-$35 billion invested in the IA system in the past 10 years, PE investors have discovered the sound fundamentals of IA businesses and have created more options than ever before for agents looking to sell their agency, retire or change their day-to-day business activities. While we experienced a pullback in mergers and acquisitions (M&A) in 2022, the IA system is continuing to experience record levels of M&A activity, and we expect 2023 and beyond to continue this trend.