Is this a fair Multiplier? Buying a BoB.

[lhpgators]

I am buying a small book from an agent in town (North Central Florida) who is retiring. He is asking a 1.75 multiplier. Here are the specifics:

Revenue: $100,000
Standard PL: 49%
Commercial: 22%
Non-Standard PL: 29%

The agent handled the book alone, no employees. I am doing my due diligence and so is the owner. He wants to make sure his customers will be well taken care of. Which I think is great, because that makes the customer feel good with the new ownership...hoping this will help with the retention.

I have been hanging out in his office for several days to see how smoothly things work on his day to day. No issues there.

Do you all think 1.75 is a fair multiplier?

 

[Kasey Ring]

Based on research conducted yes, that is a fair multiplier. Let me know if you have questions on due diligence or lending. We always recommend some "skin in the game" and a portion of seller financing as it keeps the seller engaged in the business and invested in your success.

 

[BADTROUT]

Personally, with the standard I would look at a 1.5 and the N/S I would look at a .75 to 1X multiplier. The composite for me on this would be somewhere in the 1.35 range for all in a cash buy. It would be 1.75 for an owner financed schedule with a vested interest disbursement over 3 years.

50% commission year one, on everything, new/renewal. Same on year two. On year three 25%

This way you would have the owner championing the change giving you a better conversion rate because they have skin in the game.