If you are just starting
What I had to look up
I am learning this myself, so this is not a course. It is the short version of what I went and found out, and it links to the people who actually know. If you are early enough that the vocabulary is the hard part, start here.
How a sale usually unfolds
Roughly this order, though plenty of them collapse into one another. Three of the seven bind you to something, and those three are marked. The rest you can walk away from with a phone call.
A conversation
No documents. Someone asks whether you have thought about selling, and you find out whether they are serious and whether you are. This can go on for years without becoming anything.
A confidentiality agreement
Signed by both sides before your numbers move. It is what lets you talk freely without word reaching a carrier, a competitor or your staff. It says nothing about whether you sell.
Binds: confidentiality, both ways
A first look at your numbers
Every buyer asks for roughly the same handful of things at this stage, and none of it is the full file — that comes much later, if at all. If someone asks for tax returns and employment contracts on a first pass, that is a reasonable thing to push back on.
An offer, informally
Usually a price or a spread, plus the thinking that got there. Nobody is bound by it yet. Even a figure you turn down flat is worth having, because it is the first real information most owners ever get about what they have built.
A letter of intent
The price and the shape of the deal in writing. Mostly not binding — but the exclusivity clause usually is, and it stops you talking to anyone else for a set period. That clause is the one to read twice, and its length is negotiable.
Binds: exclusivity, for a fixed period
Due diligence
The detailed review. Contracts, financials, carrier agreements, employment terms, claims history. This is the long part, and it is where a buyer who intended to renegotiate starts renegotiating.
Closing, then handover
The money moves and the ownership changes. Most sellers stay on for a while afterwards, whether as a producer, a consultant, or just somebody who answers the phone when a carrier calls.
Binds: the sale itself
The dozen words you will meet
In roughly the order you will hit them. One sentence each, which is all most of them need.
- Book of business
- Your clients and their policies, taken together. It is the thing being bought.
- Commission mix
- How your income splits across carriers and lines. A buyer reads it for concentration: one carrier at sixty percent of your income is a different business from six at ten.
- Retention
- The share of your book that renews each year. It is the single number that most affects what an agency is worth.
- Perpetuation
- The industry's word for succession — handing the agency to family, to staff, or to a buyer. Most agencies plan for the first and end up doing the third.
- Asset purchase
- The buyer buys the book and the assets, and leaves your corporate entity behind with its history. The usual shape for an agency this size.
- Stock purchase
- The buyer buys the company itself, including everything that ever happened inside it. Less common here, and it changes your tax position.
- LOI
- Letter of intent. The deal in outline, before the lawyers. Mostly non-binding except the parts about exclusivity and confidentiality, which are.
- Due diligence
- The buyer's detailed inspection between the letter of intent and closing.
- Seller note
- Part of the price the buyer owes you and pays over time, rather than at closing. It is a loan you are making to your own buyer, and its terms matter as much as its size.
- Earn-out
- Part of the price that depends on how the agency performs after you have gone. Sometimes a fair way to bridge a disagreement about value, sometimes a quiet discount.
- SBA 7(a)
- The Small Business Administration loan program commonly used to finance the purchase of a business this size. If a buyer mentions SBA financing, this is what they mean.
- EBITDA
- Earnings before interest, taxes, depreciation and amortization — roughly, what the business makes before financing and accounting. Agencies are more often priced off revenue or a multiple of commission income, but you will hear it.
A question to ask about a seller note
If part of your price is a seller note — money a buyer owes you and pays after closing rather than at it — the size of it is the obvious question. The terms are the one that matters.
Depending on how a buyer's bank financing is put together, a seller note can be required to sit on standby: no principal and no interest reaching you until the bank has been repaid in full. On the purchase of a business that can be most of a decade. The note is still yours and interest still accrues. You simply do not receive anything until the end of it.
The SBA tightened the rules around this in June 2025, so anything you read from before then may describe the old arrangement. The link below is a law firm that does nothing else, and your own accountant or attorney will know how it applies to you.
The question itself is short. If there is a seller note, when do I actually start getting paid on it? Ask me, ask anyone else who calls you, and get the answer before a number is agreed rather than after.
Where to go for the real detail
Four places that know more than I do. Sending you to them is the point of this page.
- SBA — the 7(a) loan program
The program itself, from the agency that runs it. Worth ten minutes before a buyer explains it to you, so that you are hearing their version second rather than first.
- Starfield & Smith — what changed in the SBA rules
A law firm that does nothing but SBA lending, writing on the June 2025 equity-injection rules. This is the source for the standby point above, and it is worth reading properly if a seller note is going to be part of your deal.
- Big "I" — the Agency Universe Study
The industry's own survey of independent agencies, run every two years by Future One. The 2022 edition put the average agency principal at 54, found more than eight in ten agencies had a perpetuation plan, and four in ten expecting an ownership change within five years. A 2024 edition is out. If you are wondering whether you are early or late, this is the honest answer.
- IBBA — the International Business Brokers Association
If you would rather run a process than talk to one buyer, this is where to find an intermediary who does it for a living. I am not one, and I would not be offended.
Questions to ask any buyer, including me
You are allowed to interrogate anyone who calls you. These are the ones I would want asked of me.
Where is the money actually coming from?
Their own cash, a bank, an investor, or your seller note. Ask which, ask how much of each, and ask whether they have spoken to a lender yet or only intend to.
What happens to my people, specifically?
Not whether jobs are safe in principle. Whether this person has anywhere else to move them, what happens to your producers' books, and who they report to in the first year.
How long do you have to own this?
Some buyers answer to somebody who needs the money back on a schedule. That answer shapes every decision after closing, and it is a fair thing to ask outright.
Have you done this before, and what happened?
If yes, ask to speak to the seller. If no — which is my answer — ask what they have run instead, and judge whether it is the same problem in different clothes.
Something here you would want explained properly?
If a term or a step is missing, tell me and I will add it. I am writing this down as I learn it, so the gaps are real ones.