The growing gap between the two
By Carey Wallace
There is no shortage of buyers in today’s insurance marketplace. In fact, for any given agency looking to sell, there may be 30-plus potential buyers interested. But not all buyers are the same and even more importantly not all buyers are right for every seller.
One of the most important questions that agency owners can ask themselves in today’s environment is: Am I positioning myself to acquire or to be acquired?
Independent insurance agencies that want to be competitive acquirers must take deliberate steps to strengthen their financial position, optimize operations, and build scalable infrastructures. The difference between agencies that innovate and those that remain stagnant is clear.
The innovators are positioning themselves to be acquirers and the stagnant are positioning themselves to be acquired. Those embracing technology, efficiency, and strategic growth will be the ones acquiring, while those that fail to adapt will eventually be acquired.
In a rapidly evolving industry, agencies that proactively streamline workflows, leverage automation, and create capacity will have the upper hand in acquisition opportunities. The ability to operate profitably, integrate new businesses seamlessly, and maintain a strong market presence will determine which agencies emerge as competitive buyers and which ones become targets for acquisition.
Before we go much further, it is important to note that well-run agencies that are positioning themselves to grow by acquisition are also very well-positioned to be acquired. In fact, these agencies command some of the highest multiples because of the same strength and performance that positions them to be a strong acquirer. But those agencies that are not well-positioned to be an acquirer are typically a target for acquisition and in many cases the multiples that they receive are much lower.
Let’s look at what agencies are doing to position themselves to be a strong acquirer.
Know the numbers
Knowing your own numbers before acquiring another agency is crucial. It will help the buyer evaluate and determine if an offer that they make is financially sound and help ensure they are executing a strategic expansion plan.
Without a deep understanding of your agency’s financial health, including profitability, revenue streams, operating costs, and growth trends, an agency owner may risk overextending resources or making acquisitions that do not align with the long-term objectives.
Strong financial awareness allows you to determine how much leverage you have for acquisitions, negotiate better deals, and integrate new business operations without jeopardizing existing profitability.
Additionally, knowing key performance indicators such as EBITDA, client retention rates, and revenue per employee ensures that the acquisition strengthens your agency rather than creating unnecessary financial strain. A well-informed approach that starts with your agency minimizes risks and sets the foundation for successful, sustainable growth.
Rethink roles
Rethinking staff roles in an independent agency is essential to ensuring that employees focus on the highest-value functions while positioning the agency for scalability.
To achieve this, agencies must evaluate which tasks can be outsourced, automated, or eliminated to free up internal resources for strategic growth. Separating sales and service functions allows sales teams to focus on revenue generation while service teams enhance client satisfaction and retention. Leveraging virtual assistants or third-party providers for administrative duties can further optimize efficiency.
By maintaining a disciplined approach, agencies
can maximize the value of their acquisitions
and position themselves for sustainable, profitable growth.
By structuring roles with clear accountability and specialization, agencies can maximize productivity, reduce operational bottlenecks, and create a scalable model that supports long-term success and seamless acquisition integration.
Invest in infrastructure
Building a strong infrastructure with repeatable and consistent processes is vital for driving efficiency, scalability, and profitability in an independent insurance agency. Standardized workflows ensure that tasks are completed accurately and consistently, reducing errors, and improving service quality. Documented procedures enable employees to perform their roles efficiently, allowing leadership to focus on strategic growth rather than micromanaging day-to-day operations.
A well-structured agency can leverage virtual assistants, automation, and other technology-driven solutions to handle repetitive tasks, freeing up internal capacity for high-value functions such as sales and client retention. Investing in a strong operational foundation not only increases profitability but also makes the agency more attractive to potential acquisitions by demonstrating stability and long-term viability.
Leverage technology
Leveraging technology is a game-changer for agencies looking to grow, scale, and become strong acquirers. Advanced agency management systems streamline operations, ensuring data is accurate and accessible, while automation reduces manual workloads and increases efficiency. Digital tools, such as customer relationship management (CRM) platforms, enhance client engagement and improve retention rates.
The integration of artificial intelligence and robotic process automation allows agencies to manage repetitive tasks with precision, freeing up valuable human capital for building strong relationships and advising customers. Additionally, technology-driven insights provide real-time analytics, enabling informed decision-making for agency operations as well as evaluating potential acquisitions.
Agencies that invest in technology solutions and implement those solutions across the organization position themselves to have the data insights needed to operate with greater efficiency and profitability. It also creates an environment more likely to attract new talent because these resources can increase the depth of training and increase the success rate of employees who are new to the industry.
Capacity
Creating capacity within an independent agency is essential for both operational success and the ability to pursue acquisitions. By streamlining workflows, optimizing staff roles, and leveraging technology, agencies can free up resources to focus on growth and strategic initiatives.
Increased capacity allows leadership to be proactive rather than reactive, ensuring smoother integration when acquiring new businesses. It also enables the agency to absorb additional clients, policies, and employees without overwhelming existing infrastructure.
Agencies that intentionally build capacity position themselves as stronger, more attractive acquirers, capable of scaling effectively while maintaining high service levels and profitability. Without sufficient capacity, agencies may struggle with inefficiencies, limiting their ability to seize acquisition opportunities and compete with more prepared industry players.
Being selective and strategic about acquisition targets is essential to ensure that each purchase aligns with your agency’s long-term vision and operational capabilities. Not all sellers are the right fit for every buyer and acquiring an agency that does not match your culture, technology, expertise, or operational framework can create significant integration challenges.
Agencies should carefully evaluate potential acquisitions based on their compatibility with existing processes, technological infrastructure, and overall business strategy. Additionally, making hasty or misaligned acquisitions can drain resources and limit your ability to act on better opportunities that may arise in the future.
By maintaining a disciplined approach, agencies can maximize the value of their acquisitions and position themselves for sustainable, profitable growth. Is your agency well-positioned to grow by acquisition or be acquired?
The author
Over the past 16 years, Carey Wallace has worked with hundreds of independent insurance agencies helping them understand their agency’s value and turn that knowledge into an actionable plan for their future. She prides herself on taking the time to understand the agency’s unique situation and helping them build the future they envision for themselves. She is a Certified Exit Planning Advisor (CEPA) and provides a variety of business consulting services including valuation, perpetuation planning services, acquisition support, financial and compensation analysis, and fractional CFO services through the company she founded, Agency Focus, LLC. To learn more, please contact Carey at Carey@agency-focus.com or visit www.agency-focus.com.
