2003 Best Practices Study

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The average multiple paid was 1.32x the acquired revenues. This was up slightly from 1.29x in
the previous year.
2003 Best Practices Study – Acquisition Results
Revenue Category % of Agencies
Acquiring
Avg.
Commissions
Acquired
% of Net
Revenues
Avg. Multiple of
Revenues Paid
Less Than $500K 5.9% $35,076 9.8% 1.0x
$500K-$1.25 M 0 0 0
$1.25M - $2.5M 7.1% $273,129 17.8% 1.95x
$2.5M - $5M 13.3% $219,978 4.8% 1.18x
$5M - $10M 25.0% $859,279 8.8% 1.1x
Greater Than $10M 37.0% $3,610,218 10.1% 1.4x
Although the immediate effect of the hard market was evident on this year’s results, the outcome
is yet to be seen. It will be interesting to see how the Best Practices agencies perform as the
market turns and margins shrink. Will they be able to maintain steady revenue growth and good
profitability? We think so. These agencies have shown that they consistently are able to achieve
good results by wisely controlling expenses, investing for future growth, and expecting the best
from their employees and carrier partners.
Need More Best Practices Information?
The 2003 Best Practices Study is available in two formats – hard copy and electronically. The
hard copy can be purchased from the IIABA Education Department (800-221-7917). The
electronic version can be accessed via the websites of IIABA and Reagan
Consulting ). From these sites, users can enter the Best Practices
Gateway home page to view an HTML version of the study, download a Best Practices
comparison spreadsheet to compare their year-end results with the study’s results, and access
the complete family of Best Practices resources.
As in previous years, the update provides an analysis of agencies by revenue size, by region and
by population density of the city in which they primarily operate. Also included is an analysis of
agencies that indicated that Personal Lines is an important source of revenue.
Other Best Practices Studies and Tools
In addition to providing benchmarks and documenting the business practices of leading agencies,
the IIABA and Reagan Consulting periodically address specific business practices or focus on
issues of critical importance to independent agencies. Such studies include The Best Practices
of Leading Sales Organizations and The Best Practices for Perpetuation and Management
Succession. Some of the tools designed to help agencies measure and improve their