As one of the nation’s leading agency valuation firms, we’re fielding many calls these days from agency principals, buyers and lenders about what impact the pandemic will have on agency values.
This question is one of the main reasons people call our office. In fact, we complete over 120 valuations of insurance agencies and brokerages each year for agency owners, buyers and lenders all asking for our professional opinion on agency market value. We are the most experienced firm in the nation when it comes to valuing agencies with under $5M in revenue, which is why the leading lenders in the insurance industry turn to us.
When agency revenues start to fall year-over-year, there is usually a reason. Sometimes the trend can be reversed, such as if it is tied to an economic cycle, but quite often the downward trend is unstoppable. In our experience, a steady decline in the business is typically an indicator that one or more of the agency principals are spending less time running the business. The enthusiasm and competitiveness that perhaps once drove growth in the business has waned.
As noted by many in the agent/broker M&A world, 2017 was the most acquisitive year on record. Reported transactions were up 20% for the first three quarters of the year over the same period of the prior two years, both [...]
In the last few months we have been completely inundated with valuation work for principals, banks and buyers – part of the reason why I haven’t actively been blogging. Right now, we are averaging about 5 reports a week and have had to hire a few more staff to keep up with the pace. By now, everyone should have heard that we are in the most active M&A market in a long, long time. You should also have heard that valuation multiples are at an historic high with nearly no ceiling left - any higher and deals will cash flow negative after debt service.
I’ve come across a few articles posted by agency valuation consultants challenging the use of EBITDA multiples in valuations. It can be argued that EBITDA is not a measure of true cash flow. It can be argued that such a [...]
It’s pretty common knowledge that Allstate agencies generally sell for a higher multiple of revenue than independent agencies. Independent agents, and former Allstate agents, are also pretty vocal that the grass is greener on the independent agent side of the [...]
This presentation discusses some best practices for growing (and managing) an independent insurance agency based on our interaction with agencies around the country as a valuation and merger and acquisition advisor.
As I reported in a previous blog a few months back, the market for selling an insurance agency is better than it has been in many years. The economy has improved from the pits of the recession, agency revenues are [...]
We occasionally run into insurance agencies that have independent contractor producers that own the rights to their book of business. These arrangements almost always create a problem with selling an agency. The arrangements usually evolve from the principals’ desire to [...]