The year the producer got expensive.

Most years, a benchmark study is read for its tables. The 2022 Best Practices Study — the annual operating-and-financial benchmark Reagan Consulting produces with the Big "I" — is worth reading for its narrative, because that narrative named a structural shift the tables only imply. The point-in-time profitability data behind it sits in the BPS trend analysis; this is the strategic context around the 2022 edition.

§ 01 · The four megatrendsWhat the top performers were watching.

Going into 2022, the study identified four forces top agencies were tracking. Consolidation — a record deal year, with the largest brokers compounding scale. Free agency — the study's framing for rising producer mobility, borrowed from the college-sports transfer portal. Remote work — which removed the geographic friction that once held producers in place. And InsurTech — sorted into broker-assisting tools, big-data underwriters, and direct-to-consumer marketers, the last two described as "seemingly futuristic, yet existential." The backdrop was record performance: 8.8% organic growth (against a pre-pandemic norm near 6%) and EBITDA margins of 22.6%, which the study attributed mostly to rebound GDP rather than a step-change in broker skill.

§ 02 · The last arbitrageWhy lift-outs replaced acquisitions.

As small-agency multiples climbed toward the double digits, the buy-side arbitrage that once let acquirers "buy at 6× and credit at 11×" inside their own valuations narrowed. The arbitrage didn't vanish — it moved down a level, to the producer book. The total economic cost of recruiting a producer with a book lands near 3.0× revenue, the equivalent of roughly 6×–8× EBITDA — well below agency-level multiples — at 40–50% margins. The reason that gap matters is what happened to the asset being moved.

Two decades doubled the margin and the multiple at once, and a top producer's book value rose about 4.6×. A specialized producer's relationships and niche expertise are portable, so that value can walk — which is exactly why recruiting accelerated.

§ 03 · The private premiumWhy sellers are tempted — and why most stay.

The study made the temptation explicit. On a representative $5M-revenue agency, a third-party sale was illustrated at roughly a 150% premium over an internal transfer — partly higher multiples, partly the margin expansion a buyer captures by normalizing owner compensation and discretionary spend. Both effects compound. Yet when the study surveyed 45 CEOs of larger independent firms on what it takes to prosper privately, 93% said yes to the question of whether a firm can prosper independently forever given capital and the right people. The ranked answers were strikingly human.

People came first (43 of 45 votes), then culture and leadership. Technology ranked seventh; capital structure ninth — counterintuitive given how much industry airtime both command. The message: the constraint on staying private is rarely money or tools. It is whether the firm can recruit, develop, and hold the people whose books make it worth keeping.

§ 04 · The four pillars of independenceThe mechanism behind the choice.

The study reaffirmed an earlier framework for what makes internal perpetuation actually work — and each pillar is a place a transfer breaks down. Healthy operations that self-fund the firm; reasonable sellers willing to transfer at internal rather than third-party prices; able buyers in the next generation with the capital and capability to absorb the equity; and an effective transfer mechanism — a structured, repeatable plan rather than a handshake. Miss any one and the private path closes, which is when the 150% premium starts to look less like a temptation and more like the only exit. The three-year arc continues in the 2023 context, and the talent side of the story is the industry talent deficit.

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