Although we just shared that lower EBITDA is not necessarily bad, as an agency owner, you are likely still curious on ways to drive up EBITDA to maximize the value of your agency. Here are some ways to increase your agency's EBITDA:

Purchasing books of business: Upon purchasing a book of business, the agency is increasing their revenue, but if debt was involved to do so, the interest expense of said debt won't reduce the agency's EBITDA. The only reductions to EBITDA will come from increases in operating expenses it takes to run that acquired book of business, if any.
Decrease operating expenses: This is no secret to business owners trying to drive up profits. IA Valuations has worked with some agency owners who operate their agencies with minimal margins so they can run lifestyle expenses through the agency, including cars, social clubs, etc. If this sounds like your situation and you plan to exit the agency in the near future, begin to think about ways you can start to decrease any unnecessary costs from your income statement.
Increase policies in force (PIFs): While increasing revenue by any means possible is great, increasing your policies in force is the best way to do so. Smart buyers and lenders are wise to the industry's hard market. Nowadays, growth is not the goal, but quality growth is. Is your agency's top line increasing just because of rate hikes, or is it increasing because the sales culture within your agency is driving new policies throughout any rate environment? The latter is the stronger way to grow.

No matter where your agency is at in its lifecycle, understanding EBITDA is important. Knowing how to talk EBITDA will make you more comfortable negotiating your agency's value, enable you to see your agency from the eyes of a lender or buyer, and help you measure if your agency's actions match its goals.

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The retiring agency owner's guide to EBITDA

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