Potential sellers who are operating defensively do not understand that “most buyers won't pay for problems they have to fix,” such as unproductive personnel and unfavorable contractual relationships, Wicher said.

Buyers also do not want to be “the bad guy” by coming in and dealing with personnel issues, said Lou Caltavuturo, a partner with consultant Dowling Hales in New York. Potential sellers should “make the hard moves now” so they can offer buyers “a clean property.” In fact, owners “should do this whether they're selling or not,” he said.

But while an investment in proven producers might be necessary, updating systems with the latest in technology might be unnecessary, since buyers integrate acquisitions into their own systems, Wicher said. “If your systems are adequate, that investment may not make sense.”

But “a huge number” of agents and brokers are not as technologically sophisticated as they should be, which impacts their valuations, said Dowling Hales' Caltavuturo. For them, the investment would be worthwhile.

InsurBanc's Pettinicchi also noted that “probably half of the agencies in the United States don't have a Web presence…How are they going to attract the next generation of tech-savvy (insurance) buyers?” he asked.

Some older owners have waited too long to make a deal, said John Wepler, president of consultant Marsh, Berry & Co. of Willoughby, Ohio.

Many of those owners did not cut back on their lifestyles over the past several years as their revenues shrank but instead cut their business expenses and did not reinvest in their operations to grow revenue, Wepler said.

Now, “they're looking for the Hail Mary (play), but they're not the most desirable business,” he said.

Many buyers, such as Itasca, Ill.-based A.J. Gallagher & Co. and Atlanta-based Digital Benefit Advisors, are looking for long-term partners, not owners formulating an exit strategy that correlates with the typical three-year earn-out portion of a deal, consultants and representatives for those producers said.

In addition, the sale proceeds on the discounted valuations of those older owners' businesses would not be sufficient to carry them through retirement, so they will have to continue “to milk the cow,” Wepler said.