Most independent agency owners don’t think about succession planning because nothing is forcing the issue. These are solid-performing agencies with strong retention, stable revenue, and long-tenured client relationships.
However, succession risk still shapes an owner’s willingness to reinvest in the business and can ultimately suppress growth.
Over time, decisions naturally become more conservative. Hiring slows. Growth initiatives become harder to justify. Carrier relationships tighten around the owner. Key employees operate without long-term clarity.
None of this impacts performance immediately. But over time, the business becomes increasingly dependent on one person. Not operationally, but structurally. This is where succession risk exists. And a gap forms.
Most owners assume succession planning only becomes relevant when they’re ready to exit. In reality, getting ahead of it with a well-defined plan influences valuation, scalability, and the range of strategic options available down the road.
This is why the most thoughtful owners aren’t necessarily trying to sell when they explore potential financial partners. They’re looking for clarity that the business can continue, grow, and transition seamlessly.
That’s a different perspective than how acquisition and book-buy conversations are typically framed in M&A.
It’s less about the need for quick liquidity and more about defining the agency’s next phase of growth and ownership. It’s about sustaining often decades-old businesses, where longstanding client relationships and trusted staff are expected to be preserved and carried forward. The agencies that address succession planning early tend to behave differently. They invest more confidently. They build roles that outlast themselves. They think in terms of enterprise value instead of annual income.
In succession planning, nothing changes operationally. Strategically, however, owners begin to view the business through a lens of long-term enterprise value. The focus shifts to building a business that can operate and truly grow without them.
That distinction usually determines how many options they’ll have later when considering potential partners or investors.
According to the data, the succession gap is far more common than most people admit.
The Numbers Behind a Quiet Problem
For a long time, succession in the agency business followed a predictable path. A family member stepped in. A producer grew into ownership. A long-tenured employee took over.
That still happens — but with more friction than it used to.
According to Liberty Mutual's 2023 Agency Growth Study, 42% of agency principals expecting an ownership change in the next five years plan for a family member to take over, and 37% plan for other principals to buy them out. Those paths sound straightforward. But the SBA reports that only 30% of small businesses successfully transition to a second generation — and that number drops to 12% by the third.
The internal perpetuation story is harder than it looks.
Meanwhile, the workforce picture is tightening. Vertafore's 2024 State of Independent Agencies report found that among employees approaching retirement, only 1 in 4 was aware of a succession plan to fill their role. Nationwide's Agency Forward research found that 1 in 3 principal agents now expect to retire later than originally planned — and 33% say they feel unprepared.
At the same time, the total number of independent agencies has declined — from approximately 40,000 in 2022 to around 39,000 today, according to Big "I" market data — with analysts pointing directly to aging ownership and succession challenges as primary drivers.
The picture is consistent: more agencies are operating successfully today without a defined plan for what comes next.
Why "Keep Running It" Becomes the Default
In the absence of a clear successor, most owners don't make a decision. They continue running the business.
And for a while, that works.
The agency produces income. Clients renew. The team handles the day-to-day. There's no forcing function to change anything.
But over time, this creates a different kind of risk — not immediate, but structural. Client continuity becomes vulnerable if a transition happens unexpectedly. Employees carry quiet uncertainty about long-term leadership. Valuation options compress if timing becomes urgent. The owner's flexibility to step back — on their own terms, at their own pace — gradually narrows.
None of this shows up in monthly revenue. It shows up when timing becomes a factor.
The agencies that navigate this well don't necessarily move faster. They just get clarity earlier. Think of it the way Warren Buffett has described preparing for unlikely but important outcomes: the cost of thinking about it in advance is always lower than the cost of scrambling when it arrives.
The Operating Environment Isn't Getting Simpler
While the succession gap is widening, the demands on agency owners are moving in the opposite direction.
Carrier expectations are rising. Production requirements are increasing. Carrier appointments are tightening. Performance is becoming more data-driven.
Hiring and retaining strong producers and service staff has become harder across the board. Client expectations — for speed, digital access, and responsiveness — continue to climb. And the consolidation wave reshaping the industry shows no signs of reversing. Since 2008, more than 10,000 insurance agency M&A transactions have been completed. Despite a pullback from the record years of 2021 and 2022, current deal pace remains above pre-peak historical levels.
That combination matters — because it changes what it takes to maintain performance, grow meaningfully, and eventually transition ownership. The agencies that are best positioned on all three fronts tend to be the ones that stopped treating succession as a future problem.
Here's a number worth sitting with: implementing a clear succession plan years in advance can increase an agency's market value by as much as 25%. The absence of one signals elevated risk to prospective buyers and compresses leverage at exactly the moment owners need it most.
Reframing What M&A Actually Means
This is where most conversations go sideways. Explains Jeff Coluccio, Head of Mergers & Acquisitions at Brightway.
When owners hear "M&A," they picture one thing: the day they hand over the keys and walk away. And because that picture is uncomfortable — or premature — the entire conversation gets avoided. But that framing misses what most M&A conversations actually look like today.
For a growing number of agency owners, the discussion isn't about exit. It's about continuity. Succession. A long-term transition that unfolds over time rather than all at once. Ownership can evolve gradually — with interim liquidity along the way, continued involvement in the business, and a defined path toward an eventual exit on the owner's own timeline.
Think of it less like selling a house and more like taking on a business partner who brings infrastructure, capital, and operational depth — while you stay in the business doing the work you actually value. It's a model Brightway has built around, and it's one that looks very different from a traditional acquisition.
The expectation going in is usually loss of control, disruption to the team, and disappearing from the local market. In many modern structures, that's not what happens.
What Actually Changes — and What Doesn't
What tends to stay the same: your client relationships, your role leading the agency, your presence in the community. That continuity matters. It's what most owners care about protecting.
What can change — meaningfully — is how the business operates behind the scenes, in models like Brightway Insurance.
Technology and visibility. Faster quoting and binding workflows across carriers. Real-time insight into pipeline, new business, retention, and cross-sell activity. Clearer reads on agency performance without having to build reporting infrastructure yourself.
Operational support. Less time spent on renewals, service or policy issues, updates or changes, and administrative load. More time focused on clients and relationships — the part of the business most owners got into this industry to do.
Marketing that runs consistently. Built-in automation for reviews, retention outreach, cross-sell campaigns, and x-date activity — without adding headcount or internal complexity.
A more structured approach to growth. Support identifying, hiring, and onboarding productive producers. Financial planning around expected return — not guesswork.
Scalability without proportional burden. Growth that doesn't require building out every function internally. Expansion with less operational drag and fewer incremental demands on the agency.
Clarity on what comes next. Understanding how ownership can evolve — including what interim liquidity looks like, what continued involvement looks like, and what the long-term transition path actually is.
For many owners, this is the real unlock. Not just access to capital — but a fundamentally different way to run and grow the business, with a line of sight into what the next phase looks like.
The Question Most Owners Are Actually Asking
When owners get honest about it, the real questions aren't about transactions. They're about identity.
What does this business look like in ten years? Who carries it forward? Am I building something transferable — or just continuing to operate?
Those questions don't have obvious answers without a successor in place. And in the absence of answers, most owners default to one of two paths: keep running it indefinitely, or eventually pursue a full sale when circumstances force the decision.
But those aren't the only options.
The agencies that navigate this moment well tend to have one thing in common: they explored what was possible before they needed to. At Brightway, those conversations happen regularly with owners who aren't in crisis — they're just thinking clearly about what they're building toward.
The Real Cost of Waiting
The biggest mistake most owners make here isn't choosing the wrong path. It's waiting too long to understand what the paths are.
When succession becomes urgent — whether through health, a key employee leaving, a carrier relationship shifting, or simply the accumulation of years — options narrow. Leverage decreases. The flexibility that existed five years earlier is gone.
Starting earlier does something different. It creates optionality. It keeps the owner in control of the outcome rather than subject to it.
The conversation shifts — from if to how and when.
And that shift, it turns out, is the most valuable thing an agency owner can do for the business they've spent a career building.
Frequently Asked Questions
What are my options if I have no succession plan? You have more options than most owners realize — including partial partnerships, phased ownership transitions, and structures that provide interim liquidity while you remain involved in the business. A full immediate sale is one option, not the only one.
How do I know what my insurance agency is worth? Agency valuation typically centers on EBITDA multiples, revenue retention rates, carrier relationships, and book quality. The presence or absence of a succession plan itself can affect value by as much as 25%, according to industry benchmarks.
Does partnering with a larger organization mean losing control of my agency? Not necessarily. Many modern partnership structures are designed to preserve the owner's role, client relationships, and community presence while adding operational infrastructure behind the scenes.
When is the right time to start thinking about succession? Earlier than feels necessary. The owners with the most flexibility tend to be the ones who started the conversation when there was no urgency — not when circumstances forced it.
What happens to my employees and clients if I transition ownership? In well-structured transitions, client relationships and staff continuity are typically a priority for both parties. Your relationships are the core of what makes the agency valuable — protecting them is in everyone's interest.
Interested to learn more, book a call with Jeff Coluccio, Head of Mergers & Acquisitions!