1. Valuation Math: Taking the Mystery Out of Agency Valuation TOM BRANIFF, J.D., CPCU

2. Range of Acquisition Values (as expressed in multiples of revenues) Trade reports:.7 to 3.2. Average 1.3 IIAT Matchmaker: 1.3 to 2. Average 1.5 Subject to payment terms

3. Components of Valuation Pro forma Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Risk or discount factor Tangible value of the balance sheet Working capital Payment terms

4. Preliminary Info Identify non-negotiables or deal killers Verify seller entity type Year to date and most recent 2 - 3 year end financials Copy of company’s printed premium/loss ratio reports for previous 3 years Year end production reports from carriers with loss ratios Determine who owns agency/book of business and who’s authorized to make sale Resumes of staff & any employment agreements E&O Claims history and current open claims

5. Sample Pro-Forma EBITDA Worksheet Sample AdjustmentsActual%NRAdjustmentsPro Forma Revenues P-C Commissions & Fees $260,20277.81% $260,202 Group/Health/Life $21,8726.54% $21,872 Contingent/Bonus $51,78715.49% (25,000)$26,787 Miscellaneous $5320.16% $532 Gross Revenues $334,393100.00% (25,000) $322,119 Less outside commission expense - - Net Revenues $334,393100.00% - (25,000)$322,119 Compensation Expense Executive Payroll $80,00023.92% (40,000) $40,000 Production Payroll $3,8211.14% $3,821 Service & Support Payroll $115,43834.52% $115,438 Employee Benefits $34,61010.35% (12,459)$21,316 Total Compensation Expense $233,86969.94% (52,549)$181,410

6. Adjustments continued Operating Expense Occupancy $ 18,822.005.63% $ 18,822.00 Telephone $ 6,181.001.85% $ 6,181.00 Postage $ 2,558.000.76% $ 2,558.00 Supplies/Printing $ 2,371.000.71% $ 2,371.00 Dues/Subsc/Contributions $ 698.000.21% $ 698.00 Taxes/Licenses $ 108.000.03% $ 108.00 Insurance $ 7,272.002.17% $ (4,770.00) $ 2,502.00 Professional Fees $ 3,160.000.94% $ (900.00) $ 2,260.00 Equipment Rental/Maintenance $ 9,232.002.76% $ (7,500.00) $ 1,732.00 Bad Debts $ 57.000.02% $ 57.00 Outside Services 0.00% Education/Training $ 1,260.000.38% $ 1,260.00 $ 2,520.00 Miscellaneous $ 1,212.000.36% $ 1,212.00 IT Expense 0.00% $ - Total Operating Expense $ 52,931.0015.83% $ (11,910.00) $ 41,021.00 Administrative Expense Amortization $ 396.000.12% $ (396.00) $ - Depreciation 0.00% $ - Officer Life $ -0.00% $ - Interest $ 324.000.10% $ (647.00) $ (323.00) Total Administrative Expense $ 720.000.22% $ (720.00) $ - Total Expense $ 301,558.0090.18% $ (71,429.00) $ 230,129.00 E&O Expense $ (132.00)-0.04% $ 132.00 $ - Total Expenses $ 301,426.0090.14% $ (71,297.00) $ 230,129.00 Pre-Tax Profit $ 32,967.009.86% $ 46,297.00 $ 79,264.00