acquisition multiples

Live Oak Bank Reports “Realistic” Acquisition Multiples

WILMINGTON, N.C., Sept. 28, 2017 — Live Oak Bancshares, Inc. (“Live Oak”) (Nasdaq:LOB), performed an analysis of 27 retail agency acquisitions completed in the last 18 months. Results indicate that acquisition multiples are realistic and providing ample cash liquidity to sellers. The sample included only privately-owned agencies with standard and preferred markets; specialty niche agencies, program administrators and wholesalers were excluded.

Results:

Acquisitions of 16 Agencies Revenue Under $500,000:

  • Acquisition Multiple:
    • Revenue Multiple 2.0
    • EBITDA Multiple 5.5
  • Buyer Down Payment 4% of purchase price
  • Seller Carry Average 23% of purchase price

 Acquisitions of 11 Agencies With Revenue Over $500,000 and Less Than $2 Million:

  • Acquisition Multiple:
    • Revenue Multiple 1.8
    • EBITDA Multiple 5.2
  • Buyer Down Payment 3% of purchase price
  • Seller Carry Average 17% of purchase price

“We frequently finance perpetuation scenarios where there is a strong desire by the seller that the agency remains independent,” Mike Strakhov said. “In those situations, sellers are getting an attractive and fair valuation, significant cash at closing, and perpetuation of the agency identity.”

“Buyers are committed to providing quality client service, ongoing carrier relationships, and employee stability in these transactions,” Kelly Drouillard added “This sector of the market provides ownership opportunities to buyers who can build wealth over the long term.  Sellers enjoy the rewards of successful agency ownership with a nice buyout deal.”

With a dedicated lending team focused exclusively on the insurance industry, Live Oak Bank offers insurance agency loans for agents, MGAs, wholesalers and program administrators. The team has over 40 years of experience in agency operations, financing and mergers and acquisitions.

About Live Oak Bank

Live Oak Bank was founded in 2008 to provide small business loans to professionals across the country looking to start or expand their businesses. Live Oak is an FDIC-insured national footprint bank and one of the largest originators of small business loans in the country. To learn more about Live Oak Bank, please visit www.liveoakbank.com/insurance.

Contact:
Melissa Manuel, Marketing Programs Manager, Live Oak Bank

melissa.manuel@liveoak.bank

O: 910.338.3035

Live Oak Banking Company. Member FDIC. 2017 Live Oak Banking Company. All rights reserved.