The insurance agency mergers and acquisitions market has entered a new phase in 2025. After years of rapid growth, the pace has stabilized.
In the first half of 2025, 319 transactions were announced compared to 345 in the same period of 2024, an 8 percent decline.
Even with the drop, industry experts call today’s 750 to 800 annual deals the new normal. That level is still strong compared to pre-2020 activity. For independent agencies in Texas, understanding insurance mergers and acquisitions trends is critical to making the right decisions about growth, succession, and partnerships.
What does the current market look like?
- Annual transactions have declined for three years but remain healthy.
- Private equity continues to drive most activity, accounting for 72 percent of deals.
- The number of unique buyers is shrinking, showing a consolidating buyer landscape.
- Large-scale transactions continue, such as Gallagher’s pending $2.9 billion acquisition of AssuredPartners.
For Texas agencies, this means more competition from national firms and private equity-backed buyers, but also continued opportunities to sell or buy insurance agency operations.
How are agencies valued in 2025?
- EBITDA multiples average between 6x and 10x.
- Revenue multiples range from 1.5x to 3.0x annual commission income.
- Premium valuations go to agencies with strong growth, client retention, and carrier relationships.
Texas insurance agencies may see slightly different ranges depending on local competition, carrier access, and market conditions. Factors that improve valuations include:
- Steady organic growth
- High client retention and low concentration risk
- Strong carrier appointments
- Efficient operations and use of technology
Should you grow organically or through acquisition?
Independent agencies face a choice between organic expansion and acquisitions. Buying another agency brings immediate scale and new talent.
Organic growth avoids risk integration and preserves independence. Both paths can be supported by organizations such as insurance aggregators that provide resources while allowing ownership independence.
How do you time an M&A decision?
Timing matters for both buyers and sellers. Market conditions, personal readiness, and succession planning all play a role.
Many agency owners use M&A as part of retirement planning. Starting early ensures better options and higher valuations when the time comes to sell your insurance agency.
What financing options exist?
- SBA 7(a) loans: Require about 25 percent down, offer long repayment terms
- Commercial bank loans: Lower interest rates, require collateral
- Commission-based lending: Loans tied to renewal commissions
- Seller financing: Flexible, often part of smaller deals
- Private equity capital: Available for larger deals, though it requires giving up some ownership
What due diligence steps are critical?
Buyers should review:
- Three years of financial records
- Client concentration and retention data
- Carrier contracts and commission structures
- Staff roles and retention likelihood
Regulatory requirements also apply. Form A filings are needed for transactions that transfer 10 percent or more ownership of voting securities.
State licensing and carrier appointment transfers are essential. Professional liability and E&O coverage continuity must be confirmed.
How do agencies succeed after a merger?
Post-acquisition integration often determines long-term success. Priorities include:
- Retaining staff through incentives and clear communication
- Communicating with clients to maintain trust
- Aligning cultures to avoid friction
- Consolidating technology and processes to improve efficiency
What role does succession planning play?
Many agency owners wait too long to plan succession. Research shows that 42 percent expect family members to succeed them, while 37 percent expect other principals to take over.
Without a plan, agencies risk rushed sales or reduced valuations. Succession planning should begin 5 to 10 years before expected ownership changes.
What does the future look like?
Experts expect the M&A market to stay steady at 750 to 800 annual transactions. Factors that could change activity include interest rates, regulations, and broader economic conditions. Generational turnover will also continue to drive deal flow as many baby boomer owners retire.
Practical steps for Texas agencies:
- Build relationships early with potential partners and buyers.
- Strengthen financial performance to improve valuations.
- Explore support from insurance aggregators to expand market opportunities.
- Develop and update succession plans well before retirement.
- Stay informed about industry trends and valuation ranges.
Closing Thoughts
The insurance agency M&A market in 2025 shows signs of stability, with transaction levels settling into a sustainable range. Independent agencies in Texas can succeed by staying informed, planning ahead, and making strategic choices.
Whether you decide to sell your insurance agency, expand through acquisition, or focus on organic growth, preparation is the key to maximizing value and securing long-term success.
