September 2026
Every agency owner faces the same two questions eventually. The owners who answer them early get a choice; the ones who answer them late get whatever is available.
Start five years out, minimum
Perpetuation is not a transaction, it is a process, and most of the value is created in the years before anything is signed. An owner who decides in January to sell in June is selling into whatever the market happens to be offering.
Five years gives you time to fix the things that depress a multiple, to develop an internal successor if that is the route, and to be unhurried, which is worth more than any negotiating tactic.
The three routes
Internal perpetuation. Sell to a producer or a family member, usually over several years, usually partly financed by the agency's own cash flow. Keeps the agency independent and looks after the staff and clients you spent a career building. Slower, usually a lower headline number, and it depends completely on having somebody capable who wants it. That person has to be developed, and that takes years.
Sale to another independent agency. Often a good cultural fit and a reasonable price. The buyer usually knows your market and your carriers.
Sale to a consolidator. Typically the highest headline number, frequently with earn-outs that mean the headline is not what you receive. Expect changes to staff, systems and autonomy. That is a legitimate choice, and it should be made with clear eyes rather than discovered afterwards.
What actually moves your multiple
Every one of these is something you can change, and all of them take years:
- Mix. Commercial weighting raises the multiple. Moving toward commercial.
- Retention. A demonstrably sticky book is worth more than a larger volatile one. What a point is worth.
- Carrier concentration. A book dependent on one carrier is a risk the buyer prices in. Why.
- Dependence on you personally. The single largest discount there is. If the relationships are yours rather than the agency's, the buyer is purchasing something that may leave when you do. Transferring relationships to staff takes years and is the highest-return work available to an owner planning an exit.
- Clean records. Accurate data, documented procedures, current E and O, no unresolved disputes. Diligence problems cost real money at the table.
Do not skip the valuation
Get a real one before you need it, and get it from somebody whose fee does not depend on the outcome. Most owners carry a number in their head that is either well above or well below reality, and both errors are expensive: one loses the deal, the other loses the value.
Where a network fits
A network sees both sides of this market, owners looking to sell and owners looking to buy, which is precisely the market an individual agency has no view of. It can also help with the unglamorous parts: developing an internal successor, structuring the financing, and pointing out the things that will come up in diligence while there is still time to fix them.
One thing to check in any network agreement before you get close to this: whether the network has a right of first refusal if you sell. Exit clauses.
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