The thing I like least about my work is delivering unexpectedly low agency valuations to agency owners. Most handle the news well, but it still is difficult to tell them that they have not built valuable agencies. The upside for these owners is that they can use this knowledge to increase their agencies' value, and the result inevitably is a smoother-running, more profitable agency.
A handful of owners, though, do not take the news so well. Most have achieved high incomes for many years, and issues that negatively affect their agency's value have not (seemingly to them, at least) adversely impacted their earning power. If their incomes are high, they seem to reason, how can their agencies' values be low? In many cases, the owners simply have been lucky that certain factors have not taken a heavier toll. In others, especially with small agencies, the impact often isn't realized until a valuation or sale has been initiated.
When valuing agencies, I encounter four common issues that often take owners by surprise.
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