Insurance Broker Valuation: EBITDA and Revenue Multiples

Introduction

Insurance brokers are the one FIG sub-sector where standard corporate finance valuation works. Unlike banks (where debt is the operating business), insurers (where reserves and underwriting risk dominate), or asset managers (where AUM drives revenue), insurance brokers are asset-light intermediaries that earn commissions and fees for placing client risk with underwriters. They bear no underwriting risk, hold no significant balance sheet assets, and generate cash flows that resemble a professional services firm more than a financial institution. This means EV/EBITDA and revenue multiples, the standard tools of corporate valuation, apply directly. Public insurance brokers trade at approximately 16-18x EV/EBITDA, among the highest multiples in all of financial services, reflecting structural advantages that make the business model exceptionally attractive for both strategic acquirers and private equity rollups.

The 16-18x EV/EBITDA range for public insurance brokers (Marsh McLennan, Aon, Arthur J. Gallagher, Willis Towers Watson) reflects five structural characteristics that differentiate brokers from nearly every other FIG sub-sector.

Recurring revenue: Insurance policies renew annually, and brokers retain 90%+ of clients at renewal. Aon reports that 80% of its revenue is "highly recurring." This predictability gives brokers revenue visibility comparable to software-as-a-service businesses, which also trade at premium EBITDA multiples. Organic growth rates in Q4 2024 ranged from 5% (Willis Towers Watson) to 7% (Marsh McLennan and Gallagher), with mid-market leaders achieving 10-11%.

High margins with operating leverage: Top-tier brokers generate EBITDA margins of 25-30%+, and incremental revenue drops through at even higher margins because the cost of servicing an additional policy renewal is minimal. The asset-light model requires virtually no capital expenditure, meaning nearly all EBITDA converts to free cash flow.

Sticky client relationships: Complex commercial insurance programs (construction, healthcare, professional liability, D&O) require deep expertise and multi-year advisory relationships. Switching brokers is disruptive and risky for clients, creating natural moats. Niche expertise in complex verticals commands the highest valuations within the brokerage sector.

EBITDAC (Earnings Before Interest, Taxes, Depreciation, Amortization, and Commissions)

EBITDAC is the insurance brokerage-specific variant of EBITDA that adjusts for producer commissions. In some brokerage structures, producer commissions (payments to the individual brokers who originate and service client accounts) are treated as a variable cost that should be deducted before measuring operating profitability. EBITDAC is the standard M&A metric: Gallagher's acquisition of AssuredPartners at $13.45 billion was quoted at 11.3x EBITDAC net of synergies (14.3x gross). When comparing deal multiples, always clarify whether the multiple is on EBITDA or EBITDAC, as the difference can be 1-2 turns.

Insurance brokerage M&A is among the most active deal markets in all of FIG, driven by a combination of strategic consolidation and private equity-backed rollups. Recent platform transactions illustrate the premium the market places on scale.

The tuck-in acquisition model is the engine of brokerage consolidation. Smaller independent brokers (typically $1-5 million EBITDA) are acquired at 7.5-12x EBITDA, then integrated into a platform that trades at 16-18x. This 200-500 basis point multiple arbitrage creates instant value upon integration: a $5 million EBITDA broker acquired at 10x ($50 million) becomes worth $85 million at the platform's 17x multiple. Platform EBITDA multiples for tuck-in acquisitions averaged 11.8x in YTD 2025.

The insurance brokerage valuation framework stands apart from every other methodology in the FIG valuation toolkit. There is no P/TBV analysis (brokers have minimal tangible book value), no DDM (dividends are a small part of the return), and no embedded value (there are no long-duration liabilities). Instead, brokers are valued like the best recurring-revenue businesses in any sector: on the quality and predictability of their cash flows, the durability of their client relationships, and their ability to grow organically while acquiring at accretive multiples. When brokers appear in a SOTP analysis of a diversified insurer (such as Allianz's distribution operations or a carrier's affiliated brokerage), they receive EV/EBITDA treatment at 16-17x, often the highest-multiple segment in the entire conglomerate.