Narrowly- Vs. Broadly-Held Stock Ownership and the Impact on Agency Value
We have found that many agencies are on one side of the spectrum or the other when it comes to stock ownership. Whether they operate with narrowly-held or broadly-held stock ownership can have quite the impact on their agency’s value. We hope to highlight the major differences between the two in this article. Narrowly-Held Stock […]
Perpetuation Planning – The Sooner The Better
When perpetuating an agency, it is important to remember that the earlier you start your planning, the more options you will have, and having more options increases your value. Agencies that wait too long or don’t plan effectively will have fewer viable options and may not realize the full potential value of their agency. Time […]
The Outsized Impact of Contingent Income
In our last article, we noted the impact of contingent income on agency profitability. We found that 34.3% of the agencies in our database rely on contingent income to be profitable, and that too many agencies are running their businesses as though contingent commissions are guaranteed each year. To further emphasize the importance income to […]
Reliance on Contingent Commissions for Profitability
Contingent commissions first appeared in the 1960’s. As insurance companies cut the commissions paid on premiums, they offered an offset as a way for agents to make up for the lost commissions – with strings attached. Agents who met certain goals tied to premium volumes, and the profitability of the book of business, could earn […]
More than 30% of Insurance Agencies Lack Employment Agreements
One of the factors that we consider when determining the risk of an agency is whether or not the agency has producer agreements and employment agreements in place. It is essential for agencies to have both non-competition and non-solicitation agreements in place with their employees during normal operations, and especially when going through an ownership […]
Is it Time for Your Annual Agency Tax Check Up?
As we near the dreaded Tax Day, we urge all independent agency owners to take some time to review your corporate structure with your tax expert. A review will determine if you are best positioned to reduce your yearly tax burden, and to better understand the tax liability you will face when you eventually sell […]
What Impact Does Agency Ownership Age Have on Agency Performance and Valuation?
If age is just a number, then why does that number appear to have such a significant impact on agency performance and valuation. At IA Valuations, we study aggregate data on hundreds of agencies and we have found that the ownerships age has a direct correlation on growth and overall valuation.
Using an Agency Valuation as a Roadmap for Growth
Why Agency Owners should Utilize an Agency Valuation as a Business Planning Tool In today’s business climate, agency owners can no longer afford to use revenue multiples to understand agency value. The exact calculation of agency value requires a much deeper dive into the numbers, employees, and operation to get an accurate assessment of an […]