2017 Best Practices Study
Profitability
Employee Productivity
Rule of 20 Score
Pro Forma Metrics: # of Employees
Top Quartile
27.5
34.1%
Average
26.2%
22.8%
86.23
16.6
14.1%
Revenue per Employee Compensation per Employee Spread per Employee
$201,356
$260,901
Pro Forma Operating Profit
Pro Forma EBITDA
$124,427
$94,048
Average
Top Quartile
$76,929
$111,708
Comparison Group Average
Top Quartile
Notes
Organic Growth & Profitability Scatter Plot
The Rule of 20 measures an agency's shareholder returns. It is calculated by adding 50% of an agency's Pro Forma EBITDA margin to its organic commission & fee growth rate. An outcome of 20 or higher means an agency is likely generating, through profit distributions and / or share price appreciation, a shareholder return of approximately 15% - 17%, a typical agency / brokerage return under normal market conditions. The graph to the right provides a look at the Rule of 20 results for agencies in this revenue category. The solid black line represents all combinations of organic growth and EBITDA margin that result in a Rule of 20 score of 20.
•
50.0%
45.0%
40.0%
35.0%
30.0%
25.0%
Profitability (EBITDAMargin)
20.0%
•
15.0%
10.0%
5.0%
0.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Organic Growth
Note: Firms identified as outliers have been set to have a maximum growth of 20% or a maximum profitability of 50%. They appear on the graph line bordering the chart instead of plotting their actual results.
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