Earn-Outs, Seller Notes, or a Fixed Price: How a Small Florida Insurance Agency Sale Gets Paid in 2026
By Ricardo Alonso, Founder, Atesa Risk Advisors · September 3, 2026
Key Takeaways
- Books under $500,000 in commission revenue get a fixed price from us, paid at close — no earn-out, no retention true-up. Above that line a retention earn-out or seller note can pay a seller more than all cash, and the math below shows when.
- Prime is 6.75% [1]; the SBA 7(a) variable-rate ceiling is 9.75% on loans above $350,000 and 12.75% from $50,001 to $250,000 [3]; goodwill — what an insurance book is — can be financed for at most 10 years [2].
- SBA rules prohibit seller earn-outs, limit the seller to a 12-month consulting contract (24 months from October 1, 2026), and count a seller note toward the buyer's 10% equity injection only on full standby — no principal or interest for the life of the loan [5][6][7].
- $600,000-revenue book: all cash pays about $930,000; a 60/40 cash-plus-retention earn-out pays about $1,052,000 at 94% retention and about $936,000 at 80%.
- Florida Statute 626.753 allows deferred commissions to be paid to a seller whose license has lapsed [9]; the IRS installment method lets a seller report gain as payments arrive [8]. 695 agency deals nationally in 2025 against roughly 30,000 agencies under $1.25 million in revenue [10]; 73.3% of Florida's 10,837 agency locations have fewer than five employees [13].
Should you take an earn-out or seller financing when you sell a small Florida insurance agency, or hold out for all cash? It depends on the size. Under $500,000 in commission revenue, don't take an earn-out at all — a fixed price paid at close is the right deal for a book that size, and it is the only structure we offer there. From $500,000 to $1 million, a retention earn-out usually pays more than all cash — about $1,052,000 against $930,000 on the $600,000-revenue book worked below — because an all-cash buyer must price every year of retention risk into one number, while an earn-out pays you for the retention you actually deliver. The exception at any size is an SBA 7(a)-financed buyer, who cannot offer an earn-out and pays cash at close instead, under a valuation ceiling. The first decision in an agency sale is the structure. The number follows from it.
The SBA will not finance an earn-out. The rule sits in SOP 50 10 8, the manual every 7(a) lender follows, in four words: "Seller earnouts are prohibited" [5]. It splits the market into two buyers: one with a bank, who pays at close and then needs you gone within a year or two, and one paying from their own balance sheet, who can share the next three years of renewals with you — and pay more for the privilege. The national market did 695 deals in 2025 and 292 in the first half of 2026 [10][12], bottoming out near 650 a year [11] against roughly 30,000 agencies under $1.25 million in revenue [10]. Florida is the small end of the small end — 10,837 agency locations, 73.3% with fewer than five employees [13] — and the buyers for those books are local agencies and individual producers paying from their own pockets. I buy Florida books under $1 million, so I write these offers for a living. That's my bias, and it's why I can show the arithmetic. Structure is price.
Our rule: under $500,000, a fixed price at close
Start with the deal most Florida sellers are actually in. If your book brings in less than $500,000 a year in commission, we don't offer an earn-out, and I'd be wary of a buyer who does. An earn-out lets a buyer defer the retention question for two or three years; on a small book that deferral costs both sides more than it protects. Someone has to define which accounts count, pull carrier reports at every anniversary, argue about a client who moved to Georgia, and carry a receivable the seller cannot plan around. On a $75,000 book those costs are a real share of the price. On a $600,000 book they are noise.
So on small books we do the work up front. Three years of carrier production reports and the retention math set the price once — inside the published band, 0.8x to 1.2x under $100,000 and the standard table above it — and you leave closing with a number that does not move. If you want the payments spread for tax reasons, a fixed-schedule seller note does that without tying a dollar to retention. What you give up is the upside an earn-out can pay a seller whose book outperforms. On a small book the certainty is worth more than the upside, and the rest of this post is about the size where that stops being true.
The three structures, side by side
Under $500,000 there is one column: a fixed price. Above it, three:
| Retention earn-out | Seller note | SBA 7(a) cash at close | |
|---|---|---|---|
| Cash at closing | Typically 50–70% | 30–60% | Most of it; a seller note counts toward the buyer's equity only on full standby [5][6] |
| The rest depends on | The book's retention each year | The buyer paying a fixed schedule | Nothing — it's paid |
| Upside if the book outperforms | Yes, with a kicker | No | No — only a downward "buyer rebate" [5] |
| Price ceiling set by | Negotiation | Negotiation | The valuation — independent if over $250,000 is financed [5] |
The $600,000 book, worked three ways
A personal-lines agency in St. Johns County: $600,000 in commission revenue, 94% retention, 6% of policies with Citizens, seven appointments. On the framework in our valuation guide that's a 1.7x base with no adjustments — a $1,020,000 midpoint inside a $930,000–$1,110,000 band.
All cash. The buyer carries every year of retention risk, so the offer lands at the bottom of the band, $930,000.
Earn-out. Headline $1,020,000: $612,000 wired at closing, and $408,000 in three annual installments of $136,000, each scaled by how much of the original book's commission revenue is still on the books at that anniversary against a 90%-a-year assumption, capped at 110%.
| Annual retention on the accounts you sold | All cash, paid at close | Cash plus earn-out, three-year total |
|---|---|---|
| 94% (your track record) | $930,000 | about $1,052,000 |
| 90% (the buyer's assumption) | $930,000 | $1,020,000 |
| 85% | $930,000 | about $976,000 |
| 80% | $930,000 | about $936,000 |
Retention has to fall about fourteen points below your track record before the earn-out stops beating the cash — at 80% the two are within about $6,000 of each other, and the all-cash buyer's pricing would have been right. Structure is price.
I am not saying every earn-out is a good one. I've read buyer-drafted versions that measure against 100% retention, which no book hits. If your real retention is under 80%, take the cash.
SBA-financed buyer. This one pays the full $1,020,000 at close, and it costs you something. The price can't exceed the valuation, and with more than $250,000 financed an independent appraiser sets that number [5]. No earn-out — only a "buyer rebate," a price cut if the book underperforms: your downside with none of your upside [5]. A seller note can cover at most half of the buyer's 10% equity injection, and only on full standby: no principal or interest until the 7(a) loan is paid off, up to ten years, on SBA Form 155, whose first checkbox says you'll accept no further payments until the bank is satisfied [5][6]. The buyer also pays an upfront guaranty fee — about $25,200 on a $960,000 loan (price plus fees and closing costs, less the buyer's 10% injection), 3.5% of the guaranteed portion under the FY2026 fee schedule that runs through September 30, 2026 [4] — and roughly $12,600 a month at the 9.75% ceiling over ten years [1][2][3]. What you get is certainty. It isn't free.
The $75,000 micro-book: why the price is fixed
Under $100,000 in revenue, books price at 0.8x to 1.2x regardless of mix, because a deal's fixed costs don't shrink with the book. A Lake County personal-lines book with $75,000 in commissions, 91% retention, and one policy in five with Citizens sits in a $60,000–$90,000 range, and where it lands inside that range is set by what the production reports show — not by a formula that runs for three years after closing.
Run the earn-out logic on a book this size and you see why we don't. A 25%-of-collections earn-out over three years would pay a few thousand dollars a year, and every one of those payments would need a definitions clause, a carrier report, and a reconciliation. The buyer spends a day a year administering it; the seller waits three years for the last $10,000 of a $75,000 deal. Neither side is better off. SBA money barely fits here either — a 12.75% ceiling on loans between $50,001 and $250,000 [1][3], and bank closing costs out of proportion to a $60,000 loan. Micro-books get a fixed price, paid at close, and the diligence does the job the earn-out would have done.
How retention is measured, and the protections that make an earn-out pay
This section is for the $500,000-plus book where an earn-out is on the table. Retention, plainly: of the policies on the accounts you sold that came up for renewal this year, how many renewed. Every dollar of an earn-out turns on how that sentence gets defined, so define it before the buyer's lawyer does — then add the clauses that make it enforceable.
1. Which accounts, measured how. The client list attached to the agreement, by name and policy number, plus new policies written for those same clients after closing. Pay on revenue with a policy-count floor; a policy count treats a $9,000 commercial account and a $180 renters policy as equals. Measure at each anniversary on carrier reports you can audit.
2. What doesn't count against you. Non-renewals you didn't cause: a carrier leaving the state, a client's death or move, and the Florida one — a Citizens takeout to a carrier the buyer isn't appointed with. Citizens is down to 266,093 policies from a peak near 1.41 million, after more than 546,000 moved to private carriers in 2025 alone [13]. Carve it out.
3. A floor and an accelerator. A minimum installment — say half of face — regardless of retention, traded for a lower cap on the upside. And acceleration: if the buyer sells or moves the accounts, loses the appointments that hold the book, misses a payment, or files bankruptcy, the remaining installments come due at full target.
4. Security, guaranty, reversion, covenants. A recorded security interest in the book, the buyer's personal signature behind the entity's, the right to take the accounts back on default, and covenants to keep the appointments and a service standard.
Taxes and the license question
The IRS installment method exists: a sale with at least one payment after the tax year of sale is an installment sale, and you may report gain as each payment arrives or elect to report it all at once; note interest is ordinary income [8]. Buyer and seller also allocate the price across asset classes on Form 8594, goodwill last [8]. Your CPA runs this before the letter of intent — and it applies to a fixed-schedule seller note on a small book just as it does to an earn-out on a large one.
Section 626.753 lets a Florida agent share commissions only with other licensed, appointed agents, on pain of revocation — but it expressly allows renewal or other deferred commissions to be paid to a person who has ceased to hold a license [9]. Paper an earn-out or a seller note as deferred purchase price — not as a share of commissions with an unlicensed person — and if any installment is measured as a percentage of collected commissions, rest it on that deferred-commissions provision. Confirm the drafting with counsel, and keep your license active through the last installment anyway.
"The best earn-out I ever paid went to a seller who arrived with the definitions already written — which accounts, revenue not policies, Citizens takeouts carved out, measured on carrier reports at each anniversary. She knew her retention was 96%, every installment paid above face, and the structure let her get paid for being right about her book. On a book a quarter that size I'd have handed her a fixed number and we'd both have been done in an afternoon."
— Ricardo Alonso, Founder, Atesa Risk Advisors
Your five-step timeline
| Step | What to do |
|---|---|
| 1. Run your true retention | Three years, by policy count and by revenue, from your own carrier reports. |
| 2. Know which side of $500,000 you're on | Under it, expect a fixed price at close from us — and ask any other buyer why they want three years of your time for a small book. Over it, ask each buyer how they're funding the deal; an SBA-financed buyer cannot offer an earn-out [5]. |
| 3. Price the structure, not the headline | Run three retention scenarios; the valuation tool gives the range. |
| 4. Draft the definitions and protections first | For an earn-out: accounts, revenue versus policies, carve-outs, audit rights, floor, acceleration, security, reversion. |
| 5. Bring in the CPA and attorney before the LOI | Installment method, Form 8594, and the 626.753 papering [8][9]. |
I can't tell you where prime will be in 2028, or whether the next takeout round pulls a tenth of your Citizens accounts. I can tell you exactly what a well-drafted earn-out does when either happens, because the answer is written in the definitions and the floor — and I can tell you that on a book under $500,000 you won't need one from us. Structure is price. Write the structure first.
FAQ: earn-outs, seller notes, and fixed-price deals for a Florida agency sale
Q: Does an earn-out really pay more than all cash when selling an insurance agency?
A: Above $500,000 in revenue, usually. An all-cash buyer prices every year of retention risk into one number; an earn-out pays for the retention you deliver. On a $600,000-revenue book at 94% retention, the worked example pays about $1,052,000 over three years against $930,000 all cash. Under $500,000 we don't offer one — the price is fixed and paid at close.
Q: Why doesn't Atesa use earn-outs on books under $500,000?
A: Because the mechanism costs a small deal more than it protects. Defining the accounts, pulling carrier reports at each anniversary, and reconciling payments for three years is a real share of the price on a $75,000 or $250,000 book and almost nothing on a $1 million one. On small books the diligence sets a fixed price once, and the seller leaves closing with a number that does not move.
Q: How is retention measured in an insurance agency earn-out?
A: Policies on the accounts you sold that renewed, divided by policies that came due, measured at each anniversary on the carriers' production reports. Which accounts count, policy count versus revenue, and which non-renewals are carved out matter more than the formula.
Q: Can an SBA 7(a) loan buy an insurance agency with an earn-out?
A: No. SBA rules prohibit seller earn-outs in a financed change of ownership; only a "buyer rebate" that lowers the price if the business underperforms is allowed [5]. After closing the seller is limited to a 12-month consulting contract, or 24 months under SOP 50 10 8.1 from October 1, 2026 [5][7].
Q: What is a full-standby seller note?
A: A note on which the seller receives no principal or interest for the entire term of the buyer's SBA loan — up to ten years — documented on SBA Form 155 [6]. It is the only way a seller note counts toward the buyer's 10% equity injection, and it can cover at most half of it [5][7].
Q: Can I receive earn-out or seller-note payments after my Florida insurance license lapses?
A: Florida Statute 626.753 expressly permits renewal or other deferred commissions to be paid to a person who has ceased to hold a license [9]. Paper the payments as deferred purchase price rather than commission-sharing with an unlicensed person, and confirm the drafting with counsel.
Q: What happens to my earn-out if the buyer fails or sells my book?
A: Whatever the purchase agreement says — which is why acceleration and reversion clauses exist. With them, a sale of the accounts or a default makes the remaining installments due in full and lets you reclaim the accounts. Without them, your earn-out is an unsecured claim against a business you no longer control.
Related Reading
- What Is a Florida Insurance Agency Actually Worth? A Buyer's 2026 Valuation Guide — the framework behind every number here.
- Selling an Insurance Agency in Jacksonville or North Florida: The 2026 Local Owner's Guide — the county-by-county layer.
- The Florida Small Agency Market Report — 2026 Edition — the annual data behind this post.
- Selling Your Florida Insurance Agency Because You're Done, Not Retiring: The 2026 Career-Change Seller's Guide — the seller a fixed price at close was designed for.
How Atesa Risk Advisors Can Help
We buy Florida agencies and books under $1 million in revenue — directly, no listing, no broker fee, an NDA before any numbers move, and a range within a week. Under $500,000 the price is fixed and paid at close; above it we show you the earn-out, seller-note, and SBA math side by side. Home territory is North and Central Florida: Duval, St. Johns, Clay, Nassau, Putnam, and Flagler; Orange, Seminole, Osceola, Lake, Volusia, Polk, and Brevard.
Want to see what your book pays under each structure, not just the headline? Run it through the valuation tool or call (904) 900-5063 for a confidential conversation about structure before price.
Sources
[1] Federal Reserve — H.15 Selected Interest Rates (September 2, 2026) [2] SBA — 7(a) loans (September 2, 2026) [3] SBA — 7(a) Loan Program Terms, Conditions & Eligibility (September 2, 2026) [4] SBA — Information Notice 5000-872051, 7(a) Fees for FY2026 (August 28, 2025) [5] SBA — SOP 50 10 8, Lender and Development Company Loan Programs (June 1, 2025) [6] SBA — Form 155, Standby Creditor's Agreement (April 5, 2023) [7] SBA — SOP 50 10 8.1, Appendix 15: 7(a) Changes of Ownership (October 1, 2026) [8] IRS — Publication 537 (2025), Installment Sales [9] Florida Statutes §626.753, Sharing commissions; penalty (2026) [10] Insurance Journal — Pace of Insurance M&A Lagged in 2025 With No 'Mad Dash': OPTIS (January 22, 2026) [11] Insurance Journal — Trend of Fewer Insurance M&A Deals 'Bottoming Out': OPTIS (May 18, 2026) [12] Insurance Journal — Insurance M&A Pace Down 15% in First Half 2026: OPTIS (August 17, 2026) [13] Atesa Risk Advisors — Florida Small Agency Market Report 2026 (August 2026), compiling Citizens Property Insurance Corp. Policies in Force (citizensfla.com, as of August 28, 2026), U.S. Census Bureau County Business Patterns 2023 (NAICS 524210), and the Big "I" 2024 Agency Universe Study (iamagazine.com)
Ricardo Alonso is the Founder of Atesa Risk Advisors, a Florida independent insurance agency in Jacksonville. Licensed 2-20 General Lines Agent and 2-15 Health & Life Agent, with a Master of Liberal Arts in Finance from Harvard University. He grows the agency in part by acquiring books of business from retiring Florida agency owners, and the structures in this post are the ones he writes — which is why the terms are published rather than proprietary.
Educational disclaimer: This article is general educational information and is not an offer to purchase, a valuation opinion, an appraisal, or tax or legal advice. Agency and book-of-business pricing varies with diligence findings, market conditions, and deal structure; consult your CPA and attorney before entering any transaction. For a personalized conversation, contact Atesa Risk Advisors, an independent, RamseyTrusted brokerage licensed in Florida (2-20 General Lines).