Chris Burand (Burand & Associates) questions the high prices that have been paid for many insurance agencies over the past few years. “Were/are those prices too high relative to the seller’s fundamental value?” asked Burand in a recent Insurance Journal article. Heavily leveraged and publicly financed buyers usually focus on the arbitrage value. While Burand also considers the implication of arbitrage value, it is not where he puts the most weight for fair market value. Instead, he focuses on the inherent value of an agency's ongoing operations. “Arbitrage-based valuation in a bubble economy will always elevate prices beyond the firm’s fundamental value.”
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