Broker Multiples Compressed. Here Is Why It Is Still a Strong Time to Sell.

Kevin Donoghue on Insurance Banter with Chris Burand.

Mystic Capital co-founder Kevin Donoghue joined Chris Burand on the Insurance Banter podcast to discuss agency valuations, AI, private equity, and timing a sale. Key takeaways below.

The headline most owners are reacting to

Publicly traded insurance broker valuations have compressed sharply. Over roughly fifteen months, the mean public broker multiple moved from about 20 times EBITDA to under 13 times, with the median following a similar path. For an owner watching from the outside, the natural conclusion is that the window has closed.

That conclusion is wrong, and understanding why is the difference between a reactive decision and an informed one.

What is actually driving the compression

The leading factor is uncertainty, not deterioration. The market is still working out how artificial intelligence will affect personal lines and small commercial business, and uncertainty alone is enough to pull public multiples down. Talent movement among the largest brokers has added to the noise. None of this changes the underlying cash generation of a well run agency.

Why the private market tells a different story

Public multiples and private transaction multiples are not the same market. There are more than three dozen private-equity-backed acquirers active in insurance distribution today, many of them firms a typical owner has never heard of. These buyers hold substantial capital that has to be deployed, and acquisitions are where they deploy it. That dynamic keeps private multiples firm even as public comparables move.

The practical problem is access. Most owners only ever hear from the three or four acquirers who happen to call them. They never see the full field. A competitive process run by a specialist puts the real buyer universe at the table, and that is where both value and fit are determined.

Fit matters as much as price

Price is only one variable. An owner should let a process establish value, then focus on fit. Some sellers want to be folded into a larger platform. Some want to become a platform themselves. Some want a technology-enabled partner. The right outcome depends on the people and the structure, not the headline number alone.

Timing and process

A sale takes time. A realistic plan is six months, which includes a buffer for diligence and legal items that commonly run long. The core process, from launch to selecting a partner, runs about three months. For an owner targeting a 2027 transaction, that means being in market by late summer. Waiting to start is the most common way to lose optionality.

Read the deal structure closely

Deal terms are shifting. The traditional structure of roughly 80 percent cash and 20 percent equity is moving toward 70 percent cash and 30 percent equity at some firms. As the equity portion grows, so does the importance of understanding exactly what that equity is. Is it the same security other shareholders hold? Are there protections you are missing? Rollover equity is a material part of the consideration and deserves the same scrutiny as the cash.

Trust but verify

Diligence runs both ways. Sellers expect to prove their numbers, but the buyer should prove theirs as well. A buyer who will not share a balance sheet is a significant warning sign. Leverage discipline matters here: three to four times EBITDA is a secure range, while anything above six times should raise questions about how that debt load will be managed. Where a buyer resists disclosure, the agreement should carry representations, including on leverage, that give the seller real comfort.

Why a specialist matters

An owner sells once. The buyers on the other side of the table acquire agencies dozens of times. That asymmetry of experience is the entire argument for having a specialist advisor who knows the buyer field, the structures, and the questions a generalist accountant or attorney will not think to ask.

Mystic Capital has been involved in well over a thousand completed transactions across twenty-five years in the insurance M&A market. If you are weighing the timing of a sale, the depth of the buyer market, or the structure of an offer in front of you, that is exactly the conversation we are built for.

Listen to the full Insurance Banter episode with Kevin Donoghue and Chris Burand:

Featured on the Insurance Banter podcast with Chris Burand, Burand & Associates