Sell or Scale? Rethinking Your Independent Agency’s Next Move

Agency owners today are operating in one of the most aggressive mergers and acquisitions (M&A) markets the industry has ever seen, with private equity firms driving the majority of acquisitions. Valuations are high. Buyers are active. And principals who may never have considered selling are suddenly fielding serious offers.

For many owners, this is the first time they have truly understood what their agency might be worth in the open market. It can be eye-opening. “There’s a decision process involving whether an owner continues to hold on to this asset and continues to work. Or is this just too good to be true and time to sell?” says Dan McCarthy, CEO of ISU Steadfast.

The question is legitimate. After decades of building relationships, growing revenue, and reinvesting in the business, the opportunity to monetize that effort can feel like the logical next step. But it’s not the only step.

ISU Steadfast represents hundreds of independent agencies. Collectively, the network’s brokers place more than $7 billion in gross written premium annually. That scale delivers credibility, leverage, and access — while members retain ownership.

Key Takeaways

• Selling isn’t the only option for independent agents.High valuations exist, but scaling first can preserve ownership and flexibility.
• Many owners face restrictions after selling. Earnouts, reduced control, and cultural changes are common post‑sale challenges.
• Increasing EBITDA boosts future value. Improving profitability before exit can significantly raise valuation.
• Agency networks enable scale without selling. Independent networks provide leverage and support while owners keep equity.
• Waiting can create better long‑term options. Scaling first supports succession planning and a stronger eventual exit.

Why Agency Owners Think About Selling

The reasons agency principals explore a sale are rarely purely financial. Many are in their 50s or 60s and are looking to retire in the near future. Some are unsure about succession. Others feel the growing weight of compliance demands, technology investments, staffing challenges, and carrier expectations.

Private-equity backed buyers offer capital, infrastructure, and scale. On paper, the transaction often looks like a win. Yet McCarthy cautions that the reality can feel very different after the ink dries.

“Many regret the sale soon after,” he says. “The majority of principals will comment that what looked attractive at closing can feel restrictive within a year.”

The regret isn’t necessarily financial. It’s cultural and personal. Selling often means staying on for three to five years under new ownership. Systems and reporting structures change. Staff roles shift, with decisions about longtime employees no longer entirely in the seller’s hands.

In many cases, regret also stems from earnout pressure tied to aggressive growth targets, cultural shifts imposed by outside ownership, loss of underwriting autonomy, and reduced flexibility in carrier relationships.
For many principals, clients aren’t just accounts. They’re long-standing relationships that may not transfer loyalty to a new owner, impacting brand value.

How To Scale Without Selling

McCarthy urges owners to pause and consider alternatives such as ISU Steadfast before making a permanent decision. His message isn’t anti-growth; it’s pro-ownership.

ISU Steadfast offers scale without requiring the principal to sell equity. Unlike many network models in today’s market, ISU Steadfast membership does not require ownership dilution, forced carrier placement, production thresholds to qualify, book encumbrances, or restrictive exit provisions. Agencies remain independent while gaining the leverage, market access, proprietary tools, and the operational support of a larger network. The structure is designed to enhance profitability and competitiveness without altering who owns the business or how it serves clients.

With ISU Steadfast you’re part of a larger group that helps you with some challenges independent agencies have in running a business, explains McCarthy. Instead of selling to address these challenges, agencies can partner with a network that increases leverage without sacrificing equity.

The Financial Case for Scaling First

Beyond independence, the economics are compelling. Doug Penley, President of ISU Steadfast, frames the math clearly:

“If we help an agency add $1 of EBITDA, we help them add $1 of profit, increasing the valuation of their agency between $12 and $18.” In today’s market, agencies frequently trade between 12x and 18x EBITDA. Consider the impact:

• A $250,000 EBITDA increase could translate to $3 million to $4.5 million in additional enterprise value.

• A $500,000 increase in EBITDA could add $6 million to $9 million in value at exit.

Penley points to a recent example. “We had a member who we paid over a million dollars in profit share last year. That’s a million dollars that they would not have earned if they had not been part of our group.”

At a 15x multiple, that additional $1 million in EBITDA equates to $15 million in incremental enterprise value.

Scaling first does not eliminate the option to sell later. It can materially increase the value of that eventual sale.

Perpetuation and Long-Term Strategy

One of the most common drivers behind a sale is uncertainty concerning succession. Owners may worry about who will lead the agency in five or 10 years.

ISU Steadfast’s structure supports internal perpetuation strategies. By increasing profitability and strengthening market position, principals can create meaningful equity opportunities for producers and key employees. This strategy not only aligns incentives but also builds a leadership bench.

“If you’re 50 and you plan on tapping out at 60 and you want to grow your revenue as much as possible in the next 10 years,” Penley says, “we help you maximize that income.”

Rather than selling prematurely due to scale pressures, principals can use that decade to intentionally build enterprise value, potentially creating a more favorable and flexible exit when the time is right.

What Our Current Members Are Saying

The Weedin Agency joined ISU Steadfast in 2022 after being approached by others to either sell or join a network. “We didn’t want to sell, and most networks required sacrificing ownership once you joined. We wanted to be free to continue to make our own decisions,” Eric Weedin explains. “Independence is crucial for us. … ISU Steadfast gave us the support we needed without tying us down. It’s been one of the best decisions we’ve made.”

Carrie Ryan of Hanson & Ryan echoes Weedin’s sentiment. When she joined ISU Steadfast 12 years ago, she sought access to more competitive carrier contracts and greater profit-sharing potential without compromising the agency’s independence. “ISU Steadfast helps us stay competitive while remaining authentically us.”

A Decision That Deserves Deliberation

Selling an agency is permanent. Once equity is transferred, it cannot be reclaimed. McCarthy emphasizes that owners should evaluate every alternative before making the  decision to sell. “Before signing a letter of intent, engaging in due diligence, and committing to a three- or five-year earnout, hit pause and look at your options.”

ISU Steadfast is a strategic growth platform. We are not anti-sale, but pro-maximizing enterprise value before selling. Joining ISU Steadfast can increase profitability, enhance carrier leverage, and provide community support, positioning agencies to build greater enterprise value should a sale be considered in the future. The key is that the decision remains with the agency owner.