EBITDA Multiple
Also known as: Earnings multiple
An EBITDA multiple values an insurance agency at a fixed multiple of its normalized EBITDA, typically 4.5x to 12x depending on agency size, growth, and book quality.
What is ebitda multiple?
The EBITDA multiple is the dominant valuation method once an agency clears roughly $250,000 of normalized EBITDA. It captures what revenue multiples can't: that two agencies with identical revenue but different margins are not worth the same number.
Multiples scale meaningfully with size. A micro agency under $250K EBITDA trades at 3.5x to 5.0x. A small agency at $250K–$500K trades at 4.5x to 6.5x. Lower midmarket ($500K–$1M) is 6.0x to 8.5x. Midmarket ($1M–$3M) is 8.5x to 11.5x. Upper midmarket and large regional agencies clear 10x to 14x or higher. The reason: bigger books unlock a larger pool of institutional buyers (private equity-backed platforms, regional brokers) who compete more aggressively and accept thinner cash-on-cash returns.
Within each size band, a quality-band adjustment of up to ±1.5x reflects retention, growth trend, margin, book composition, producer concentration, AMS quality, and transition plan. Premium-quality agencies clear the top of their band. Concentrated, declining, or weakly-staffed agencies clear the bottom.
Why it matters in agency valuation
An EBITDA multiple is what institutional buyers actually use to underwrite. If your agency is large enough that the EBITDA method applies, the headline number a sophisticated buyer will quote you is the EBITDA multiple, not the revenue multiple. Knowing your normalized EBITDA — and the size tier it puts you in — is the single most important number in your valuation.
Example
How MyAgencyValue uses this
MyAgencyValue computes normalized EBITDA from your Tier 2 inputs (head counts, owner comp, revenue) using industry-typical ratios, then applies the size-tiered multiple with the 7-factor quality band.
Common questions
Why are larger agencies worth a higher multiple of EBITDA?
Three reasons: a deeper pool of institutional buyers competes for them, scale dilutes key-person risk, and the post-close integration is easier to model. A $5M EBITDA agency is a platform a buyer can build a region around. A $300K EBITDA agency is a tuck-in.
What if my reported EBITDA is very different from my normalized EBITDA?
Your normalized EBITDA is what buyers will pay against. If you over-pay yourself or run heavy owner perks through the agency, your reported EBITDA will be lower than your normalized EBITDA, and buyers will normalize it upward. The reverse is also true. Either way, the EBITDA multiple is applied to the normalized number, not the reported number.
Related terms
EBITDA is earnings before interest, taxes, depreciation, and amortization — the cash-flow proxy buyers use as the denominator in agency valuation multiples.
Normalized EBITDA is reported EBITDA adjusted to reflect what the business would have earned at market-rate owner compensation and without one-time or owner-discretionary expenses.
A quality band is the up-or-down adjustment applied to a base multiple based on book quality factors — typically capped at ±1.5x of EBITDA multiple, distributed across 7–8 individual factors.
A size tier is the EBITDA range that determines an agency's base EBITDA multiple — six tiers run from Micro (<$250K EBITDA) to Large Regional ($10M+ EBITDA).
A revenue multiple values an insurance agency at a fixed multiple of its annual commission revenue, typically 1.5x to 3.5x depending on book composition and retention.
Last reviewed: April 24, 2026
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