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AGENCY / BROKERAGE VALUATIONS
Insurance agencies and brokerages are regularly bought and sold. Often, agencies will merge or establish cluster format arrangements. Insurance producers, upon occasion, leave one firm for another, either bringing "their" business with them to the new entity, or, should they have an ownership interest in the business, perhaps selling it back to their present employer. There are also instances when insurance carriers and agencies dispute ownership of the business and/or expirations. There are a myriad of variations possible here; with the commonality that a fair market valuation be established. There are many ways of valuing an agency ranging from the very simple multiple of annual commission to sophisticated discounted cash flow and return on capital analysis. In many cases, there really is no "buyer" nor "seller" of the business, but valuations need be made for other purposes. Where there are actual sales of an agency or brokerage, there are countless ways of structuring the payment over time - some with adjustments upwards or downwards depending upon the retention (or even growth) of the original business over some time period - generally the same as the pay-out period. Satori's President and owner, Bennett Bibel, has bought and sold a fair number of agencies and brokerages, added and terminated producers "owning" their expirations, and evaluated dozens of others for potential sale or spin-off. He has negotiated with both buyers and sellers, and their attorneys. He has testified as an expert witness in a number of cases in which the agency, brokerage, or producer valuation was in contention. He has constructed many graphic presentations illustrating net present values, projected commissions over time, with variations for growth or attrition of business, and the potential impacts of industry premium rate cycles. While most recent valuations have been made in conjunction with Satori's litigation support consulting activities, other situations could be accommodated for appropriate fees.
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Last revision: August 25, 1997
