Buying a P&C Agency in Texas

[Laura15]

Hi,

I'm in the market to purchase an agency in the south central Texas area. I currently have an option to buy an agency in this area, but I feel the estimated valuation is not correct. Can someone tell me what is usually the multiple of the agency's profits?

Example - Agency commissions are $350K and current owners are asking for $1,000,500 ( Which is a multiple of 3) is this correct?

Thanks!

 

[Markthebroker]

There is a lot more to it. Is this commercial (higher retention) or personal (lower retention). if this is commercial, what kind of bizz? Is it mostly contractors (lower retention) or mostly auto repair shops (higher retention)? Is the csr staying on (higher retention) or leaving (lower retention).

There is a lot more to factor than a simple multiplier.

 

[Laura15]

There is a lot more to it. Is this commercial (higher retention) or personal (lower retention). if this is commercial, what kind of bizz? Is it mostly contractors (lower retention) or mostly auto repair shops (higher retention)? Is the csr staying on (higher retention) or leaving (lower retention).

There is a lot more to factor than a simple multiplier.

Commercial business is probably 25% mostly restaurants. Retention is close to 75%- 88%

CSR will not stay- we rather not. However, I do most of CSR right now so it be fine.

 

[InsCommentary]

Unless you’re willing to overpay, valuation should be performed by an experienced consultant. Check out www.agencyconsulting.com.

 

[Markthebroker]

If there is CSR turnover, that will increase account loss no matter how good of a csr you think you are. Commercial is generally going to be higher retention, but restaurants are generally a pain in the @ss. Ultimately, I think InsCommentary gave you some great advice. No matter how much it costs to hire an expert, not hiring an expert when you need one is usually more expensive.