Ridgeway Insurance Agency- Buy or Pass?
Keywords:
SECRJ, Southeast Case research Association, insurance agency, business, financial metrics, revenue, major purchase, caseAbstract
Robert Morris, a successful insurance agency owner needed to decide whether to purchase the agency of another agent that was leaving the business. This was a major purchase. Robert estimated that the agency would cost between $500,000 and $565,000. Typically, agencies in this market sold for about 2.2 to 2.5 times the revenue (commission payment to the agency). Robert was intrigued by the opportunity to grow his business and expand into another market. Based on his review of the key financial metrics of the agency, Robert had concerns that needed to be weighed before a final decision could be made.
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