What is My Agency Worth?  

Few questions stir more discussion amongst independent insurance agents. Often times, we find these discussions center on “rule of thumb” metrics and personal opinions of our peers. Understanding the fair market value of your Agency takes so much more than just multiplying your revenue by some widely discussed multiple. Ultimately, an Agency’s fair market value is determined by its sustainable future earnings power.

Future Earnings Power

Estimating the future earnings power of an Agency is where the practice becomes as much an art as a science. How the Agency operates and the owners’ plans for its perpetuation, have profound effects on its potential future earnings power, and therefore, its value. Whether the Agency owners intend to perpetuate internally, sell to an outside party or continue their operation of the Agency, its value can only be determined by a pro-forma estimate of its future earnings power under each set of specific circumstances.

Agency Operations

The current M&A market for insurance Agencies is very strong with many deals taking place at higher earnings multiples than we have seen in the past. In our experience, the agencies that are selling at the highest multiples are the agencies that operate to best practices. These agencies have considered all factors in the operation of their Agency:

Because an Agency’s true value is determined by its future earnings power, and future earnings power is dependent on the way in which the Agency operates, Agency owners are presented with any number of actions that can be taken to maximize their value. In all cases, it takes effort and commitment on the part of agency owners and managers. All business owners should know the value of their business. Having a thorough professional appraisal completed my Nohre & Co. will do just that. Even if you’re not looking to sell your agency in the short term, an Agency valuation will point out the areas where your agency needs attention and allow your Nohre Insurance Team Consultant to formulate the actions that can be taken to maximize your value, minimize tax effects of a potential sale, and operate a productive and profitable agency.

Because an Agency’s true value is determined by its future earnings power, and future earnings power is dependent on the way in which the Agency operates, Agency owners are presented with any number of actions that can be taken to maximize their value. In all cases, it takes effort and commitment on the part of agency owners and managers.

All business owners should know the value of their business. Having a thorough professional appraisal completed my Nohre & Co. will do just that. Even if you’re not looking to sell your agency in the short term, an Agency valuation will point out the areas where your agency needs attention and allow your Nohre Insurance Team Consultant to formulate the actions that can be taken to maximize your value, minimize tax effects of a potential sale, and operate a productive and profitable agency.