AGENCY VALUE. Independent Insurance Agents & Brokers of SC 114th Annual Convention – Savannah, GA Jon Persky, CPA, CIC, PHR. Do You Have a Perpetuation Plan?. When to Retire?. Average Life Expectancy 75 years Time Sleeping - 25 years 50 years Your Youth - 20 years
Independent Insurance Agents & Brokers of SC
114th Annual Convention – Savannah, GA
Jon Persky, CPA, CIC, PHR
Value can only be determined by a pro-forma estimate of its continued earnings power under the circumstances.
Remove or change any conditions (owners, location, growth, profitability) and the value changes accordingly.
Five years of pro-forma earnings under stable operations. Discount for the value and risk factors derived from the past profit picture, balance sheet review, and inherent risks within the business.
Value is reduced by a working capital requirement (based on the most recent operating year).
Tangible Hard Net Worth of the business is adjusted to eliminate assets those that have no tangible value. This Hard Net Worth is added (subtracted) to the value.
6Present Value of Future Earnings
1. Values the business through a formula that determines the time necessary to recoup a capital investment through an accumulation of earned surplus according to pro-forma earnings projections.
2. Value is reduced by a 30-day working capital requirement.
3. Tangible Net Worth of the business is adjusted to eliminate intangible assets. This is added (subtracted) to the value.
7Return on Investment