2017 Best Practices Study

50.9%

43.8%

41.5%

32.0%

31.5%

28.1%

27.2%

24.2%

22.7%

20.1%

19.1%

16.9%

< $1.25M

$1.25M- $2.5M

$2.5M- $5.0M

$5.0M- $10.0M

$10.0M- $25.0M

> $25.0M

Average Top Quartile

51.2%

44.1%

42.2%

34.1%

34.1%

29.0%

30.5%

26.2%

28.8%

23.7%

23.3%

28.4%

26.3%

20.5%

26.6%

22.8%

21.5%

20.4%

< $1.25M

$1.25M- $2.5M

$2.5M- $5.0M

$5.0M- $10.0M

$10.0M- $25.0M

> $25.0M

2016 BPS Average

2017 BPS Average

2017 BPS Top Quartile

Note : Pro Forma EBITDA excludes all administrative expenses (depreciation, amortization of intangibles, officer life, interest and other.)

AGENCIES WITH REVENUES OF:

<$1.25M $1.25-$2.5M $2.5-$5M $5-$10M $10-$25M >$25M

The Rule of 20:

Low

-5.8 20.1 56.5

-2.3 15.3 32.3

-4.9 18.7 48.3

-8.4 14.1 37.8

-17.6 16.6 38.4

-3.2 15.7 30.2

Average

High

The Rule of 20 measures an agency's shareholder returns. It is calculated by adding 50% of an agency's Pro Forma EBITDA margin to its organic commission and fee growth rate. An outcome of 20 or higher means an agency is likely generating, through profit distributions and / or share price appreciation, a shareholder return of approximately 15% - 17%, a typical agency / brokerage return under normal market conditions.

37.2

29.9

27.5

25.5

24.2

24.0

21.9

20.3

20.1

20.0

20.0

19.6

18.7

17.4

16.6

15.7

15.3

14.1

< $1.25M

$1.25M-$2.5M $2.5M-$5.0M $5.0M-$10.0M $10.0M-$25.0M

> $25.0M

2016 BPS Average

2017 BPS Average

2017 BPS Top Quartile