Understanding the nuances of different deal structures
helps align decisions with goals, values, and vision for the future
By Matt Naimoli
“Exit,” “Selling out,” and “Hanging ’em up” are all phrases often associated with selling an insurance agency. For many, the concept evokes images of cashing out and riding into the sunset. This was certainly my assumption before I went through the process of selling my own agency.
The reality, however, is far more nuanced. Often, selling your business involves deeply emotional and psychological decisions, shaped by preconceived notions, stories we’ve heard, and assumptions we’ve made. Most agency owners don’t fully understand the process until they experience it firsthand.
Thanks to the attractiveness of the insurance industry to investors, today’s agency sellers have an abundance of options, partners, deal structures, and contract terms. This diversity caters to the unique priorities and circumstances of different agency owners. Broadly speaking, agency sellers can be grouped into three distinct personas, each with their own priorities and preferences for potential partnerships and deal structures.
Thanks to the attractiveness of the
insurance industry to investors,
today’s agency sellers have an
abundance of options, partners, deal
structures, and contract terms.
Persona 1: Seeking new challenges
For some agency owners, the decision to sell isn’t about winding down—it’s about gearing up for something new. This persona encompasses individuals who are ready to leave the day-to-day operations of their business behind, but their motivations often extend beyond traditional retirement.
These sellers might be seasoned entrepreneurs looking for their next venture in a completely different industry. They could be driven by the excitement of building something new, leveraging their skills in a fresh context. Others might want to pivot into an advisory or investor role, using their industry knowledge and connections to support other entrepreneurs.
Alternatively, some simply feel the need for a pause. They want to take a few years to focus on family, hobbies, or personal passions—things that have taken a back seat to running their agency. While the break might not be permanent, it’s a necessary step to recharge and reevaluate their long-term goals.
For this persona, financial stability is paramount. They prefer deals with a higher percentage of guaranteed cash up front, allowing them to transition smoothly into their next phase without financial uncertainty. They are less concerned with long-term incentives like equity stakes or earn-out provisions tied to future growth.
Their focus is on maximizing immediate value, ensuring they have the resources and freedom to pursue their next chapter.
Persona 2: De-risk and continue
Not all agency owners selling their business want to step away entirely. Many have a deep passion for their work and a desire to stay involved, but they’ve reached a point where holding all their wealth in a single, illiquid asset—their agency—feels risky. This persona often includes owners who are still bullish on the agency space, but are also pragmatic about the future.
The motivations for this group are diverse. Some want to enjoy the fruits of their labor while they’re still young and energetic. They envision family vacations, experiences with their children, or time to pursue personal interests, all while continuing to lead their agency. Others may feel a growing sense of responsibility to diversify their financial portfolio.
By converting part of their equity into cash or other investments, they can protect their family’s financial future against potential industry downturns or unforeseen challenges.
This persona’s ideal transaction involves a balance of liquidity and alignment. They typically favor deals that include a substantial cash component, ensuring financial security, alongside retained equity in the agency or stock in the buying partner. This structure allows them to benefit from their agency’s future success while reducing personal risk.
Earn-out provisions tied to revenue or EBITDA growth are often appealing, especially for agencies with strong growth potential. These agreements allow owners to remain motivated and aligned with their new partners, knowing that their continued efforts will directly impact their financial outcomes.
Ultimately, this persona seeks a partnership that offers flexibility. They want to remain at the helm, continuing to drive their agency forward, but with the reassurance of shared risk and resources.
Often, selling your business
involves deeply emotional and
psychological decisions, shaped
by preconceived notions, stories
we’ve heard, and assumptions we’ve made.
Persona 3: Grow faster with less admin
The third persona represents a new breed of agency owner: ambitious, growth-oriented, and laser-focused on sales. These individuals are often former producers who excel at networking, driving leads, and converting prospects into loyal clients. Their agencies are growing rapidly, but with growth comes complexity—and for many, the administrative burdens are becoming overwhelming.
As agencies scale, the challenges of managing HR, payroll, IT, compliance, and service infrastructure can distract from the core mission of selling and serving clients. These operational demands can slow down growth, frustrate sales-oriented leaders, and lead to burnout.
For this persona, selling isn’t about cashing out or stepping back—it’s about accelerating growth by offloading administrative tasks to a capable partner. By partnering with a larger firm, these agency owners can leverage existing infrastructure and expertise, freeing up their time and energy to focus on what they do best: driving revenue.
Deals for this group often emphasize long-term growth potential. While guaranteed cash upfront is still important, they are particularly attracted to equity stakes in the buying partner, allowing them to participate in the success of a larger organization.
Multi-year earn-out provisions tied to revenue or EBITDA growth are also highly appealing, as they align the seller’s incentives with the buyer’s long-term goals.
This persona values partnerships that bring operational expertise, technological resources, and a shared vision for aggressive growth. By aligning with the right partner, they can overcome administrative hurdles, scale faster, and achieve their ambitious goals without losing focus on their strengths.
Conclusion
Agency owners have various motivations for selling their business, and no two deals are alike. Whether driven by a desire for new challenges, the need to de-risk, or a focus on scaling with less administrative burden, the decision to sell is deeply personal.
The key to a successful transition is education and preparation. By proactively exploring your options and understanding the nuances of different deal structures, you can make informed decisions that align with your goals, values, and vision for the future.
Selling your agency isn’t the end of the story—it’s the beginning of a new chapter. Whether that chapter involves retirement, reinvention, or rapid growth, the right partner and deal structure can help you achieve your goals and maximize the value of your hard work.
The author
Matt Naimoli is a partner at Legacy Advisors, an insurance sell-side M&A advisory firm helping agency owners secure the right partner, best terms, and maximum value for their business. Previously, he founded, grew, and sold his own retail agency, G&N Insurance, the November 2018 Rough Notes Agency of the Month, and has consulted with, invested in, and/or advised hundreds of companies and entrepreneurs in the insurance space. For more information, email matt@legacy-advisors.com or visit www.legacy-advisors.com.
