Part 2: What is an Insurance Agency Business Valuation?
The terms business valuation and business appraisal are synonyms and are used interchangeably.? A business valuation is sometimes incorrectly referred to as a business evaluation; while business valuation is the actual correct term.? The term valuation stems from the root word value, so business valuation means to determine the fair market value of a company’s intangible value; oftentimes referred to as economic value, market value, goodwill value, and/or asking price.? In mergers and acquisitions, the determination of fair market value is primarily driven by the subject agency’s earnings, free cash flow, EBIT, EBITDA, and SDE (“Seller’s Discretionary Earnings”).
If you see an advertisement anywhere from a firm that advertises that it offers appraisals AND valuations of insurance agencies, you should run away and avoid this firm at all costs as this should be considered a red flag by a firm that is offering this service; but does not fully understand the work that they are offering or the business valuation/business appraisal profession and is not a true and certified business valuation professional. Here’s why, the two terms, “business appraisal” and “business valuation” are synonyms so it is very odd, strange and nonsensical for a firm to advertise that it provides, “Valuations AND Appraisals”, as it makes as much sense as a restaurant advertising that its menu includes hamburgers AND beef patty sandwiches on a bun. Business appraisal is to the word “eat” as business valuation is to the word “dine.” They essentially mean the same thing, which is to eat food; but one is a more formal term and the other is the more basic terminology.
While the stand alone word “appraisal” can refer to many different things; such as gems, jewelry, baseball cards, collectables, real estate, land, machinery, equipment, art, furnishings, automobiles, etc., when you see the word “business” in front of “appraisal” or the word “business” in front of “valuation”, that is your cue that the speaker or author is referring to the appraisal/valuation of a business; versus anything else.
?
An Insurance Agency Business Valuation is Not a Real Estate Appraisal.
An insurance agency business valuation should not be compared to a real estate appraisal at all; as it is like comparing apples to oranges.? A real estate appraisal primarily comes down to square footage and location.? A professional business valuation has many more moving parts and is much more complex and labor intensive as the business valuation professional must consider and analyze financial statements, tax returns, operating performance statements, carrier reports, producer reports, industry data, economic data, valuation data, cost of capital, risk/return data, and a wide variety of other data and financial reports in order to properly determine and defend the fair market value of a captive or independent insurance agency.? I am of course only referring to captive agencies that are legally transferrable such as Allstate and Farmers; while independent insurance brokerages are readily and actively sold and acquired via a very active mergers and acquisitions market for independent insurance brokerages.
Sean H. Hayes, CVA - [email protected]
Mr. Hayes is a nationally recognized expert in the valuation of insurance agencies, insurance brokerages and other insurance industry entities. He is exclusively focused on providing business valuation, M&A and capital services to privately-held insurance brokers and agencies and other insurance industry entities for clients located throughout the United States, offshore and internationally. Mr. Hayes has over 29 years of business valuation, M&A, capital raising and expert witness litigation support experience and completes hundreds of insurance agency valuations and transactions every year, encompassing all types of valuation, capital raising, and M&A work; including buy-side and sell-side transactions, SBA 7(a) lending, estate/gift/capital gains taxes, litigation support expert witness testimony, financial reporting, wealth planning, strategic management, exit planning and corporate planning.
Mr. Hayes holds a Bachelor of Science degree with majors in accounting and finance and a minor in economics from Jacksonville University of Jacksonville, Florida; an AACSB accredited business school founded in 1934. Mr. Hayes is a Certified Valuation Analyst (CVA) and certified member of the National Association of Certified Valuators and Analysts (NACVA). Worldwide, the CVA certification is held by only around 6,500 valuation professionals and the CVA certification has been accredited by the National Commission of Certifying Agencies (NCCA), the accreditation body of the Institute for Credentialing Excellence (ICE). Mr. Hayes is a member of the American Society of Appraisers (ASA), the Institute of Business Appraisers (IBA), and a Sustaining Member of the National Association of Government Guaranteed Lenders (NAGGL). He is also a recognized Insurance Agency Valuation Expert designated by Business Brokerage Press, Inc. and a regular contributor to the Business Reference Guide: The Essential Guide to Pricing Businesses and Franchises. Mr. Hayes is headquartered in Chicago, Illinois, where he serves insurance industry clients and their advisors throughout the entire United States and internationally.
I am available to assist insurance industry clients, located throughout the United States, with the following matters: marital dissolution with goodwill allocation; business succession and exit planning; estate/gift/capital gains tax purposes; court ordered and other divestitures; capital acquisition services; shareholder buy-in/buyout; mergers and acquisitions transaction advisory; theft of book of business; noncompete violations; shareholder disputes; United States SBA 7(a) loan business valuations; buy-sell agreements; and ESOPs
I have provided expert witness litigation support services, including courtroom testimony, in various states; including Michigan, Florida, Indiana, Illinois, California, Colorado, Hawaii, Maryland, Texas, Wisconsin, Ohio, Minnesota, and Iowa.
领英推荐
Sean H. Hayes, CVA
Insurance Agency Valuation Expert
M&A Transaction Advisor
225 N. Columbus Dr., Suite 5906
Chicago, IL 60601
904.655.5565
? 2024, Sean H. Hayes, CVA. All Rights Reserved.
#allstate #farmers #insurance #insuranceagency #SBAloan #SBAlending #SBAlender #businessloan #businessacquisitionloan #brightway #greatflorida #nationwide #insurancebrokerage #insurancebroker #insuranceagencyloan #insuranceagencyfinance #buyinsuranceagency #sellinsuranceagency #insuranceagencyvaluation #insuranceagencyappraisal
Allstate farmers insurance agency SBA loan lending lender business acquisition loan insurance brokerage insurance agent broker agency finance buy sell insurance agency