There’s a quiet competition that happens long before any deal is signed. It doesn’t happen in boardrooms. It happens at the clubhouse. At dinner tables. At industry conferences and golf outings. The phrase changes but the competition typically starts when someone drops a number. “Yeah, we got a 12x multiple.”
And just like that, you can feel the collective pulse of the room shift. Heads turn. People start doing mental math, questioning their own valuation, wondering what they’re missing.
The truth? Most of those numbers aren’t real. And the ones that are… often come with fine print that costs the seller far more than they realize.
The Ego Play
Multiples have become the trophy of the M&A world. They’re the bragging rights. The validation. The “I made it” story that fits neatly into a 30-second conversation.
Buyers know this. They know how much pride and ego agency owners tie to those numbers. So they use it.
A higher multiple creates excitement. It feels like winning. But the game isn’t about what they say they’ll pay. It’s about what they’ll actually pay after the earn-outs, clawbacks, and performance hurdles. A big multiple looks good in conversation. But it’s the structure behind that number that determines whether you walk away confident or quietly frustrated six months later.
The Earn-Out Mirage
On paper, they look like shared upside. “If the agency performs, everyone wins.” In practice, earn-outs are how buyers shift risk back onto the seller.
Here’s how it plays out: You agree to a “10x” multiple. But only 8x is guaranteed. The other 2x? That’s contingent on maintaining growth targets under a new structure, new leadership, and new priorities that might not align with the way you built your success.
The reality: You no longer control the levers that determine your earn-out. You’re a passenger in your own deal. And that’s not a strategy, it’s exposure.
Control, Timing, and Risk
Buyers love earn-outs because they control three key levers:
1. Control of Operations – After the sale, they decide where resources go, which clients get attention, and how producers are compensated. That affects your revenue.
2. Control of Timing – Earn-out payments are spread across years. That’s money that should be yours, delayed or diluted based on performance you can’t fully influence.
3. Control of Risk – The risk shifts from buyer to seller. If the business underperforms, the buyer still wins. You don’t.
Earn-outs can be structured fairly but too often, they’re engineered to look generous while protecting the buyer’s downside.
That’s the part most owners miss when they chase the multiple.
The Numbers Game
Let’s break down what a “12x” deal might really mean.
If a buyer undervalues your EBITDA by just $50,000 (and most do) at a 12x multiple, that’s $600,000 off your deal value before you even start negotiating.
Now layer in:
● Exclusions (like life commissions, builder’s risk, or one-time revenue)
● Adjustments for new overhead or corporate costs
● Earn-out conditions tied to future growth
That shiny 12x can quietly turn into a real-world 8x or less. And that’s if everything goes smoothly.
Click here for my previous article:
“How Insurance Agency Owners Leave Serious Money on the Table”
for a deep-dive on how agency owners are leaving money on the table, sometimes 15% to 25% of the value they spent a career building, as well as more on the truth about multiples.
The Real Win: Optionality
Here’s what most agency owners don’t realize until it’s too late:
The goal isn’t to get the highest multiple. It’s to have options.
Options give you leverage. They give you control over timing, partners, and outcomes. When you’re ready before you have to be, you don’t get forced into a reactive decision. You move on your terms, with clarity about what’s best for your legacy, not your ego.
Preparation creates optionality. Optionality creates confidence. Confidence creates value.
How Buyers Think
Buyers operate with one goal: de-risk the transaction.
They run deal models every day. They have analysts, attorneys, and integration teams who do this for a living. They know what the average seller doesn’t:
● That owners get emotionally tied to “their number.”
● That once an offer hits the table, it’s hard to walk away.
● That saying “we’re offering 12x” sounds better than explaining “you’ll earn 8x and chase the rest.”
They know how ego influences emotion. And emotion influences negotiation. That’s why you need someone in the room whose only job is to protect you from the games behind the numbers.
How to Spot the Ego Trap
Here’s what to watch for when you’re in those early conversations:
● They lead with multiples. If a buyer’s first move is talking about “10x or 12x,” they’re setting the emotional hook.
● They discourage advisors. “You don’t need help—why pay a fee?” Translation: “We’d rather not have someone who knows what we know.”
● They offer “simple” terms. Simple often means one-sided.
● They praise your agency early. They’re building trust before tightening control.
Smart sellers don’t get seduced by the multiple. They focus on net outcome: the total value after structure, timing, and risk are factored in.
The Emotional Math
Deals aren’t just financial. They’re personal.
Your agency isn’t a line item on a spreadsheet. It’s decades of your life, your relationships, your reputation. That’s why ego plays such a big role. It’s not greed, it’s pride. You’ve built something real, and you want that recognized. But in the wrong hands, pride becomes leverage.
Buyers know that the higher the multiple, the less likely you are to question the details. It feels like validation. And that’s exactly when you’re most vulnerable.
Ego vs. Legacy
Let’s be clear, wanting a great outcome isn’t ego. But letting ego drive the deal? That’s where owners lose.
If you’re thinking about selling, ask yourself:
● Am I negotiating for my ego or my legacy?
● Am I chasing the biggest number or the best structure?
● Am I letting the buyer’s story shape my own?
The right deal isn’t about bragging rights. It’s about setting up your people, your clients, and your family for the next chapter. And that never comes from reacting. It comes from preparing.
Readiness Beats Timing
Here’s what I tell every owner I work with: The best time to prepare isn’t when a buyer calls, it’s months, even years, before that.
Because when you’ve done the work:
● You know your numbers inside out.
● You understand your true EBITDA.
● You can identify your growth levers.
● You can walk into any conversation with confidence, not curiosity.
That’s what it means to be in an advantageous position instead of a reactive one.
Buyers respect preparation. They can sense it in the first meeting. And that presence: clarity, confidence, and composure is what drives real value.
What the Smart Sellers Do
The best outcomes I’ve seen share three traits:
1. They plan early. Long before a deal is on the table, they clean up operations, build leadership depth, and strengthen recurring revenue.
2. They bring in advisors. Not to complicate things but to balance the table.
3. They stay grounded. They know the number that matters most isn’t the multiple. It’s the net result.
These are the sellers who look back with pride not regret. They didn’t chase validation; they built legacy.
Final Thought
If you’ve built a great agency, you deserve to capture its full value not just the number someone dangles in front of you.
A buyer’s job is to minimize risk and maximize return. Your job is to protect what you’ve built.
So the next time someone brags about a 12x multiple at the clubhouse, smile. Because the people who really understand deals know that number only tells half the story.
The rest is structure, strategy, and timing, and that’s where the real money (and wisdom) lives.
Takeaway
Don’t chase multiples. Build leverage. Don’t wait for the call. Be ready before it comes. And when it does, negotiate with clarity, not ego.
That’s how you win the deal and keep your legacy intact.