Use this exit readiness checklist to identify gaps, protect your valuation, and position your book of business for maximum value with roll-up platforms, regional acquirers, and SBA-financed buyers.
Commercial insurance brokerages command some of the highest multiples in the lower middle market — typically 5x to 9x EBITDA — because of their recurring commission income, high client retention, and sticky carrier relationships. But buyers, especially private equity-backed consolidators like Acrisure, Patriot Growth, and PCF Insurance, have disciplined acquisition criteria. They scrutinize client retention trends, revenue concentration, E&O history, and producer dependency before making an offer. Sellers who begin exit preparation 12 to 24 months in advance consistently achieve better multiples, cleaner deal structures, and larger upfront payments versus earnout-heavy terms. This checklist walks you through every phase of preparation — from financial documentation to carrier appointment confirmations — so you can close with confidence and protect every dollar of your earnout.
Get Your Free Commercial Insurance Brokerage Exit ScoreCompile 3 years of reviewed or audited financial statements
Prepare income statements, balance sheets, and cash flow statements for the trailing three fiscal years. Separate commission revenue, fee-based income, and contingent or profit-sharing income into distinct line items. Buyers will not accept commingled revenue reporting, and inability to disaggregate these streams is one of the most common deal delays in insurance agency transactions.
Reconstruct owner add-backs and normalize EBITDA
Document all personal expenses run through the business — vehicle costs, personal insurance, above-market owner compensation, and discretionary travel. Buyers and SBA lenders require a clean seller's discretionary earnings or adjusted EBITDA figure to underwrite the deal. Undocumented add-backs are routinely discounted or disallowed during due diligence.
Prepare a revenue concentration report for top 10 and top 20 accounts
Calculate each client account's contribution to total commission revenue as a percentage. Identify any account representing more than 5% of total commissions. Buyers use this data to assess deal risk and structure earnout terms. High concentration in one or two accounts often triggers a reduction in upfront payment or an extended earnout period.
Document contingent commission and profit-sharing agreements
Compile all carrier contingency agreements, profit-sharing schedules, and volume bonus documentation. Show the trailing three-year history of contingent income receipts. Buyers and roll-up platforms value these revenue streams highly but will haircut projections if documentation is incomplete or agreements are not confirmed as transferable.
Run a trailing 36-month client retention analysis by account
Export from your agency management system a full account-level report showing policy count, annual premium volume, and commission revenue for each client over the past three years. Calculate your agency's annual retention rate by revenue and by account count. Buyers benchmark against an 85% minimum, with top-tier agencies showing 90%+ consistently.
Identify and document accounts at risk of non-renewal or attrition
Proactively flag any large accounts with known dissatisfaction, pending coverage disputes, or relationships tied exclusively to the owner-producer. Having a plan to transfer or service these accounts before going to market prevents buyers from using them as leverage to reduce price or increase earnout length.
Ensure agency management system data is clean, current, and complete
Verify that Applied Epic, HawkSoft, AMS360, or your platform of choice contains complete and up-to-date records for every active policy, renewal date, client contact, and carrier. Buyers will conduct data room review of your AMS exports. Incomplete or inconsistent data suggests operational risk and reduces buyer confidence in reported retention metrics.
Document cross-sell and multi-line account penetration
Identify the percentage of clients carrying three or more lines of coverage through your agency. Multi-line accounts have significantly higher switching costs and retention rates. Buyers value this as evidence of deep client relationships and reduced attrition risk post-acquisition.
Compile and review all carrier appointment agreements
Create a complete inventory of every carrier appointment your agency holds, including standard markets, E&S carriers, and specialty programs. Review each agreement for change-of-control provisions, assignment clauses, and minimum production thresholds. Buyers acquiring your agency need confidence that market access transfers cleanly without requiring renegotiation from scratch.
Confirm transferability of appointments with top five carriers by premium volume
Proactively contact your highest-volume carrier representatives and confirm in writing that appointments can be transferred or assigned to an acquiring entity. Some carriers require requalification of a new entity, which can take 60–90 days and disrupt post-close operations. Getting ahead of this removes a significant deal risk.
Document any preferred or tier-one status with carriers
If your agency holds preferred market access, volume tier status, or exclusive program agreements with any carriers, prepare formal documentation of these relationships. These arrangements are difficult for buyers to replicate and represent genuine competitive advantages that support premium valuation.
Review and organize all producer employment agreements and compensation schedules
Compile signed employment agreements, non-solicitation clauses, and compensation structures for every producer and account manager. Buyers require confidence that key staff will remain post-close. Gaps in documentation — especially missing non-solicitation agreements — are a major red flag that can trigger price reductions or deal abandonment.
Reduce key-person dependency by transitioning client relationships to staff
Begin systematically introducing account managers and producers to your largest commercial accounts. Ensure that at least one other team member is familiar with each account's history, coverage needs, and renewal timeline. Buyers fear accounts walking with the selling owner — demonstrating distributed relationships directly reduces earnout risk.
Document standard operating procedures for renewal, servicing, and new business processes
Create written workflows for your renewal process, certificate issuance, claims reporting, and new business quoting. Buyers and roll-up platforms need assurance that operations can continue without the seller during transition. Documented SOPs also reduce integration costs for the acquirer, which can be reflected in a higher offered price.
Obtain current E&O certificate and compile full claims history
Pull your complete errors and omissions claims history for the past five to seven years, including claims that were reported, investigated, and resolved without payment. Buyers universally require this documentation, and surprises during due diligence about undisclosed E&O claims are among the top deal-killers in insurance agency transactions.
Confirm tail coverage obligations and current policy limits
Review your E&O policy for claims-made versus occurrence terms and understand your tail coverage obligations at the time of ownership transfer. Many deals require the seller to purchase a tail policy covering pre-close activities. Factor this cost — typically one to two times annual E&O premium — into your net proceeds calculation.
Review any regulatory actions, licensing issues, or carrier market access restrictions
Confirm that all producer licenses are current across every state where you write business. Identify any pending or historical state DOI complaints, regulatory actions, or license suspensions. Buyers conducting legal due diligence will uncover these, and undisclosed issues are among the most common causes of purchase price renegotiation after a letter of intent is signed.
Engage an M&A advisor or insurance-specialized business broker
Retain an advisor with direct experience in insurance agency transactions at least 12 to 18 months before your target sale date. An experienced broker will run a competitive process, help you identify the right buyer type — roll-up platform versus strategic acquirer versus SBA buyer — and negotiate deal terms including earnout mechanics, non-compete scope, and transition employment terms.
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Commercial insurance brokerages typically sell for 5x to 9x adjusted EBITDA in the lower middle market. The specific multiple depends on client retention rates, revenue concentration, carrier market access, staff depth beyond the owner-producer, and whether your book includes commercial specialization. Agencies with 90%+ retention, diversified accounts, and multiple producers regularly achieve the upper range of this multiple. Simple rules of thumb like 1.5x to 2x annual commissions are still used in smaller transactions, but professional acquirers and roll-up platforms underwrite on EBITDA.
Plan for 12 to 24 months from the start of serious exit preparation to closing. Finding a qualified buyer, running a competitive process, negotiating a letter of intent, and completing due diligence on carrier appointments, E&O history, and client retention data typically takes 6 to 12 months even in favorable market conditions. Sellers who engage an M&A advisor early and complete documentation in advance consistently close faster and at higher valuations than those who rush the process.
Client retention post-sale is the central concern of every buyer, which is why earnout structures tied to 12 to 24 months of post-close retention are standard in insurance agency deals. The best way to protect your earnout and demonstrate retention confidence is to begin transitioning client relationships to staff producers and account managers before going to market. Accounts that know and trust your team — not just you personally — are far more likely to stay through an ownership change.
Yes. Commercial insurance brokerages with $500K or more in EBITDA are strong candidates for SBA 7(a) financing, which allows buyers to acquire your agency with 10–15% down and finance the balance over 10 years. This dramatically expands your pool of eligible buyers to include entrepreneurial operators and former producers who cannot fund an all-cash acquisition. Many SBA transactions also include a seller note for 10–20% of the purchase price, which can improve your total proceeds if structured correctly.
Carrier appointments do not automatically transfer to a new ownership entity. Each appointment agreement must be reviewed for change-of-control provisions. Some carriers require the new entity to requalify for an appointment, which can take 60 to 90 days and temporarily disrupt market access. Identifying and resolving these issues before signing a letter of intent is critical. In most acquisitions, the buyer's legal team will make carrier appointment continuity a condition of closing, so getting ahead of this protects your timeline and deal terms.
An earnout is a portion of your total purchase price that is paid after closing based on whether your client book performs as projected — typically measured by retained commission revenue over 12 to 24 months. Standard insurance agency deals pay 70–80% of the total price at closing, with the remaining 20–30% contingent on retention benchmarks. Sellers with clean retention data, distributed client relationships, and documented accounts receive larger upfront payments and shorter earnout periods. Sellers whose books are heavily owner-dependent face larger earnouts and longer measurement windows.
Yes, virtually every buyer will require a non-compete and non-solicitation agreement as a condition of purchase. The typical non-compete for an insurance agency sale is 3 to 5 years and restricts you from starting a competing agency or soliciting your former clients within a defined geographic area. If you plan to remain active as a producer under the acquiring entity — which many sellers do for 2 to 5 years post-close — the non-compete terms should be carefully negotiated to allow this role while protecting the buyer's investment.
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