As we have pointed out in numerous National Underwriter articles over the years, internally perpetuated agency valuations typically lag those of third-party buyers by a wide margin. In other words, your agency's value to an external, third-party buyer is generally considerably higher than the value of the agency for internal stock transactions.
In 2007, the average agency in our "Reagan Value Index" (an index of 30 independent agencies we value for internal perpetuation purposes on an annual basis) was valued at 1.34-times-revenue.
A review of several recent agency transactions for which we represented the seller reveals an average sale price of 2.05-times-revenue–a difference of 53 percent over our average internal valuation.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
