Insurance Agency M&A Q1 2026: Deal Count Bottoming Out — What Sellers Should Do Now

Insurance agency M&A logged 148 announced transactions in Q1 2026, down 6% from Q1 2025 — the slowest first quarter since 2016. But OPTIS Partners, who tracks every deal, says the three-year slide is likely "bottoming out" around 650 deals per year. That is both a warning and an opportunity for agency owners considering a sale. Buyers are still active — PE-backed acquirers alone accounted for 72% of Q1 transactions — but they are pickier, more disciplined, and paying premiums almost exclusively for quality books.

This post unpacks the Q1 numbers, explains what is actually shifting in the buyer pool, and gives sellers a clear framework for positioning their agency to sell at a top multiple while the window is still open.

The Q1 2026 Numbers

Here are the headline figures from the OPTIS Partners Q1 2026 M&A Update, released April 27:

The context: this was the 10th consecutive quarter below the long-term trend line. Deal volume peaked in 2021-2022 during the post-pandemic frenzy and has been grinding lower ever since.

But OPTIS partner Steve Germundson framed it differently: "The industry has ridden down a three-year slide in deal volume, which we believe is beginning to bottom out to about 650 deals per year."

That 650/year figure is important. It is roughly where we are now, and it represents what OPTIS calls a "new normal" — not a crisis, but a reversion to a more disciplined, less frothy market. For sellers, the takeaway is that the easy-money era of 2021 is over, but a functioning, competitive market remains.

Who's Buying (and Why It Matters for Your Multiple)

PE-backed and hybrid brokers accounted for roughly 72% of all insurance agency M&A transactions in 2025, and Q1 2026 continued that pattern. Of the 55 unique buyers OPTIS identified, 29 were private-equity-backed platforms.

This matters for sellers because PE buyers and independent buyers operate on fundamentally different math:

• PE buyers are looking for platforms or tuck-ins that generate accretion to their existing EBITDA multiple. The average EBITDA multiple for deals above $1 million in EBITDA hit roughly 11.4x in 2025. They can pay more because they are running an arbitrage: buy at 6-8x agency-level EBITDA, recap at 11-12x at the platform level. Smaller agencies make sense as bolt-ons if they bring geography, a carrier appointment, or a commercial book the platform wants.

• Independent buyers — individual agency owners or small partnerships — do not have that multiple-arbitrage engine. They pay out of cash flow and SBA financing. Their offers tend to be lower but their deals often come with fewer integration headaches for the seller's team and legacy.

The practical reality: if your agency generates under $1 million in revenue, the most competitive offers will come from PE-backed roll-ups looking for geographic density — but only if your book is clean. More on that below.

The Structural Forces That Keep Buyers at the Table

Deal count is down, but buyer demand has not evaporated. Several structural factors support continued M&A:

1. The supply side is massive. OPTIS managing partner Tim Cunningham points to 25,000 to 30,000 agencies nationally, a majority of which are "very small and will have to be sold eventually." Separately, approximately 39,000 independent agencies operate in the US, down from roughly 40,000 in 2022. Aging ownership is the primary driver — with roughly 50% of the insurance workforce aged 55+ projected to retire by the early 2030s, many of those 25K+ small shops will come to market whether the owner is ready or not.

2. Revenue tailwinds still exist — they are just slowing. Total US property/casualty direct written premium reached $1.05 trillion in 2024, up 9.6% from 2023. That hard-market premium growth flows directly into agency commissions, and buyers underwrite deals based on trailing revenue. As premium growth moderates, the organic growth buyers can model into their offers will shrink. That is already happening — Sica | Fletcher notes early signs of valuation compression at the large-deal level, particularly where organic growth is decelerating.

3. The independent channel still dominates distribution. Independent agencies wrote 61.5% of total P&C direct written premium in 2024, including 87.2% of commercial lines. Buyers want the channel. They just want the right agencies within it.

4. New entrants are still forming. OPTIS noted "an emerging group of new ventures backed by private-equity and family-office capital pursuing this group because of the large supply of future sellers, enhancements in technology, and long-term changes in the way insurance at the smaller end will be sold and serviced." Fresh capital entering the space means competition among buyers — and competition for quality books keeps multiples from collapsing.

What "Bottoming Out" Actually Means for Sellers

If OPTIS is right and deal volume stabilizes around 650/year, sellers face a different environment than they did in 2022. Three practical implications:

1. Buyers are doing more diligence per deal. When volume was 800+, acquirers moved fast and sometimes waived thorough vetting to win competitive processes. At 650, they have more time per deal and are saying no to marginal books they might have bought three years ago. This is good news for sellers with clean operations and real retention data — it weeds out unserious tire-kickers — but brutal for agencies with sloppy books, unverified retention claims, or owner-dependent revenue.

2. The bid-ask spread favors patient, prepared sellers. If you put your agency on the market without auditable financials, documented procedures, carrier-consent clarity, and producer retention agreements, you are competing against sellers who do have those things — for a smaller buyer pool. The spread between "ready" and "not ready" agencies is widening. See our guide on how to prepare your agency for sale for a full checklist.

3. Multiples are bifurcated — quality commands a premium. The headline EBITDA multiple of 11.4x applies to platform-scale deals. At the small-agency level, revenue multiples still range from 1.1x to 2.2x annual premium, with a median of 1.54x. But the gap between high-quality and average books is growing: agencies with 90%+ retention, commercial-heavy mix, and carrier diversification are still seeing offers well above median, while personal-lines-heavy books with sub-80% retention are struggling.

The Talent Factor: Why Buyers Pay a Premium for Retention

One data point that does not show up in M&A reports but every experienced buyer models in their underwriting: approximately 400,000 insurance industry positions are projected to go unfilled over the next decade as retirements accelerate. Meanwhile, only about 214,000 insurance professionals are between ages 20 and 24, compared to roughly 1.37 million aged 55 or older.

What this means for agency valuations is straightforward but underappreciated: buyers are buying people, not just books. A $3 million revenue agency where three key producers have non-competes, retention agreements, and a documented transition plan sells for meaningfully more than an agency with identical revenue but no producer lock-in. See our analysis of PE firms buying insurance agencies for how platform acquirers value producer stability.

The 90-Day Action Plan for Sellers

If you are considering a sale in 2026-2027, here is the minimum you should do in the next 90 days to position for the current buyer pool:

1. Audit your retention. Buyers model offers on retention rates. If you cannot produce carrier-level retention data by line of business for the last 3 years, you are leaving money on the table. Get the data now — before a buyer asks.

2. Get your financials buyer-ready. Quality-of-earnings issues kill more deals than price disagreements. Separate personal expenses. Document non-recurring items. Have 3 years of P&Ls and balance sheets ready.

3. Lock in your producers. If your top producer can walk across the street tomorrow with no consequences, a buyer will discount your valuation by the NPV of their book — or walk entirely. Non-competes, retention bonuses, and equity-like incentives should be in place before you go to market.

4. Pre-clear carrier consent. Carrier appointments are often the most valuable asset in an agency sale. If your top 3 carriers can block a change-of-control, the deal is at risk. Start the conversation early. Read our full guide on carrier consent in insurance agency sales.

5. Know your number. Run your revenue multiple and EBITDA multiple. Understand how your book composition — personal vs. commercial, retention by line, carrier concentration — shifts your multiple versus the median. Our post on what drives insurance agency multiples higher breaks this down in detail.

Should You Sell Now or Wait?

The OPTIS data does not give a binary answer, but it does give a directional one: the market is not getting stronger for sellers, it is stabilizing at a lower plateau. The window where mediocre books could fetch strong multiples closed sometime in 2023. What remains is a disciplined market that rewards preparation and punishes complacency.

If you own a small agency (sub-$1.25M revenue) with no internal perpetuation plan, the structural math is clear: roughly 30,000 independent agencies generate revenue under $1.25 million annually, and OPTIS notes that the "vast majority" of these small agencies have "no clear ability to perpetuate ownership internally." You are in a large cohort of future sellers. The earlier you prepare, the better your outcome.

If your agency is well-run with strong retention, commercial mix, and a stable producer team, you remain in the sweet spot. Buyers are competing for quality — and quality has not gone on sale.

For a deeper look at timing, read our guide on when to sell your insurance agency and the full step-by-step process for selling in 2026.

Data sources: OPTIS Partners Q1 2026 M&A Update (April 27, 2026), Sica | Fletcher / Leader's Edge, Big "I" Market Share Report via Producerflow, US Bureau of Labor Statistics. This post does not constitute legal, tax, or investment advice. Consult qualified advisors before making any sale or acquisition decision.