The book
Revenue and costs
The offer (optional)
Year-one revenue already includes one renewal cycle, so a book that retains 90% pays 90% of today's revenue next year. Leave the offer at 0 to see only the keep value and the price at which a buyer earns your required return.
Edit the numbers, then click Value the book.
Result
Value at different retention rates
| Revenue renewing each year | Keep value | Multiple of revenue | Offer value |
|---|
Year by year
| Year | Revenue | Cash kept | Present value | Running present value |
|---|
How it is calculated
Revenue in year t is annual revenue × retentiont. The owner keeps revenue × (1 − producer payout − servicing cost). Keep value is the sum of each year's cash kept divided by (1 + required return)t over the horizon. An offer is the multiple × annual revenue: the upfront share arrives at close, the rest arrives after the holdback period, discounted to today and multiplied by min(1, expected retention ÷ required retention), less transaction costs on the whole price. The break-even multiple is the price at which the offer's value equals the keep value.
Not modelled: taxes and the tax treatment of a sale, new business, contingent and profit-sharing commissions, carrier appointments, non-compete terms, transition cost, E&O exposure and earn-outs tied to new sales. Unverified: checked by hand calculation and unit tests only; compare with a qualified valuation before relying on it.
Common questions
What is an insurance book of business worth?
A book is worth the present value of the commissions and fees it keeps paying after the people who leave are subtracted. That depends on annual revenue, how much of it renews each year, what you pay producers and spend servicing it, and the return a buyer needs. Quoted multiples of revenue are shorthand for those inputs, so two books with the same revenue can be worth very different amounts.
Why does retention matter more than revenue?
Revenue is what the book pays next year. Retention decides how many years it keeps paying. At 95% retention a dollar of revenue pays for far longer than at 80%, so a small revenue book with clean retention can be worth more than a larger one that lapses. The result panel shows what one extra point of retention is worth on your numbers.
How is the offer compared with keeping the book?
The tool discounts the cash you would keep each year, then values the offer as the upfront share at close plus the held-back share discounted to today and scaled by the retention test, less transaction costs. The difference is shown, along with the price multiple at which selling and keeping tie and the year keeping catches up with the offer.
What is the holdback and how is it modelled?
Many agency purchases pay part of the price later, contingent on the book keeping a stated share of its revenue. Here the held-back amount is paid after the holdback period in full if your expected retention meets the required level, and reduced in proportion if it falls short. Real agreements define measurement periods, lapse rules and cross-sells differently, so read the contract.
What servicing cost and producer payout should I enter?
Servicing cost is the share of the book's revenue spent on staff, systems and overhead to keep it renewing. Payout is the share paid to a producer or selling agent on renewals, often zero for an owner-held book. Use your own figures; leaving both at zero overstates the value of keeping the book.
What required return should I use?
It is the annual return you would want on money tied up in the book, or the return a buyer needs for the risk. A higher rate lowers every value. The default is an illustrative 15%, not a market figure; try several and look at how the break-even price moves.
What does this leave out?
Taxes and how a sale is taxed, new business you would write, contingent and profit-sharing commissions, carrier appointments and whether they transfer, non-compete and non-solicit terms, the cost of a transition, E&O exposure, earn-outs that depend on new sales, and what the state licensing rules say about selling commissions. It values the cash flow you describe, not the agency.
Is my book data uploaded anywhere?
No. Everything you type stays in this browser tab. There are no accounts, cookies or analytics vendors.