The differences between “purchases” and “mergers” is so great that one is forced to wonder how they became so closely related in agency management literature. The two activities are fundamentally different in almost every respect. The motivations in the case of a merger are usually different from those in an agency purchase. In addition, the…
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A water bottler prices each bottle at $1. But what if the water is transported to the middle of a desert in which there is NO other source of water…is the bottle still worth only $1? If the water comes from a spring that is readily accessible for free to the locals, will they pay…
Two things are going on in the insurance marketplace. First, agencies are continuing to be bought and sold. Second, carriers are abandoning some agencies or even lines of insurance in some states. What happens when both of these come together? For example, you’re buying an agency and learn that it’s losing an important market. How…
How much is your agency worth? One times commission? One and a half times? Two times? During the last twelve months Agency Consulting Group has been involved in agency transactions which, if converted to a multiple of revenue, would have ranged from 0.75 times revenue to 3.25 time revenue. It’s amusing to convert a complex…
We are currently assisting one of our clients in an acquisition. The target agency appears to be a good fit with our client. The agency wants to sell to our client. But, for some reason, the acquisition target is reluctant to provide any detailed data for analysis and due diligence in the formation of a fair and…
One time. One and one-half times. Two times. Multiple of commissions. Multiple of revenues. Multiple of earnings. Do any of these so-called benchmarks and “thumbnail measures” have any bearing on the value of your or any other independent or captive, retail, or wholesale P&C or L&H insurance agency? The answer is both YES – AND…
No agent wants to consider divorce as a reason for valuation. However, divorces do occur to some agents and the agency business sometimes does become a part of the marital asset considered within the divorce. In various states, the separation of Professional Goodwill from Enterprise Goodwill has significantly altered the permitted agency value in divorce…
The Agency Consulting Group provides many valuations each year for independent insurance agencies throughout the United States. For some agencies it’s a one-time occurrence while, for others, its an annual event. However, agency valuations are rarely obtained simply to satisfy an owner’s curiosity about the value of his business. Every valuation has a purpose and…
Half or more of all mergers and acquisitions result in decreased values of the combined entities. How can that happen? Here’s a recent example in which we were called upon to value a combined operation after an acquisition….