I have a question about why an insurance agency is valued the way it is. From everything I can tell, the market says an agency is worth 1.5 - 2 times commissions. Why is this? The industry's retention ratio seems to be 85%-90%. I understand you have certain cost to service the accounts but doesn't this seem low when any other private business is worth 5-7 times earnings?
I am sure I am missing something. I could see paying off a new acquisition in 3ish years assuming little to no growth. What am I missing?
I am sure I am missing something. I could see paying off a new acquisition in 3ish years assuming little to no growth. What am I missing?
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