This brief captures the 2022 Best Practices Study profile for the $2.5M–$5M tier — the band where the book tips decisively commercial and a real service infrastructure stands behind the producers. Every figure here is a segment benchmark; the companion 2022 BPS tier reference explains how the tiers compare, and the year's strategic story is the 2022 context.
§ 01 · ProfitabilityProfitability & the Rule of 20.
Strong, if a step below the peak tier — a 27.8% Pro Forma EBITDA on a heavier 55.4% compensation load, as the agency carries more service and management staff. A Rule of 20 of 23.7 still clears the threshold.
| Metric | Average | Top quartile |
|---|---|---|
| Pro Forma EBITDA margin | 27.8% | 43.3% |
| Pre-tax profit | 24.6% | 45.1% |
| Rule of 20 score | 23.7 | 36.1 |
| Total Pro Forma compensation | 55.4% | — |
§ 02 · Revenue mixRevenue mix.
Commercial lines cross half the book (50.0%) as personal lines recede to 28.1% — the structural pivot toward the advisor-mediated, harder-to-disintermediate end of the market.
| Line | % of revenue |
|---|---|
| Commercial lines | 50.0% |
| Personal lines | 28.1% |
| Contingent / bonus | 8.1% |
| Group medical | 5.5% |
| Individual life & health | 1.6% |
Revenue mix, at a glance.
Commercial crosses half the book as personal recedes. Bar widths are exact percentages of revenue.
§ 03 · Growth & concentrationGrowth & account concentration.
The softest average organic growth of the bands (5.9%) — but a strong top-quartile signals wide dispersion: the best agencies in this tier grew well, the typical one paused. Account concentration sits in the middle of the range.
| Metric | Average | Top quartile |
|---|---|---|
| Net-revenue organic growth | 5.9% | 18.3% |
| Net-revenue total growth | 5.9% | 22.6% |
| Top-10 accounts (% of commissions) | 15.4% | — |
§ 04 · ProductivityProductivity per person.
About 21.9 staff, with revenue-per-employee stepping up again to $176,214 — the scale dividend continuing, even as the compensation load rises.
| Metric | Average | Top quartile |
|---|---|---|
| Revenue per employee | $176,214 | $235,687 |
| Spread per employee | $80,032 | $127,075 |
| Total staff (average) | 21.9 | — |
§ 05 · Producer pipeline & stabilityThe pipeline read.
A resilient producer success rate (64.0%) and the strongest balance sheet so far (2.01 current ratio). The weighted-average producer age of 48.2 keeps perpetuation a live planning question.
| Metric | Average | Top quartile |
|---|---|---|
| Weighted-average producer age | 48.2 | — |
| 5-year producer success rate | 64.0% | 100% |
| NUPP (% of net revenue) | 0.9% | 3.0% |
| Current ratio | 2.01 | 3.69 |
| Tangible net worth (% of revenue) | 11.3% | 28.2% |
- Commercial crosses half. CL at 50.0% against PL at 28.1% — the pivot to the durable end of the market.
- Strong, heavier-cost profitability. 27.8% Pro Forma EBITDA on a 55.4% compensation load.
- Softest average growth, wide dispersion. 5.9% average organic, but an 18.3% top quartile.
- Resilient producer success. A 64.0% five-year rate, second only to the smallest tier.
- Deeper balance sheet. A 2.01 current ratio — the strongest of the bands so far.
- Mid-range concentration. Top-10 accounts at 15.4% of commissions.
The benchmark is the baseline, not the price.
Best Practices benchmarks don't value an agency — they're the operating baseline a valuation is built on. For the $2.5M–$5M tier, the figures that move a multiple are the Rule of 20 (23.7), the commercial-lines weighting, and organic growth — where the wide gap between average (5.9%) and top quartile (18.3%) is exactly where pricing separates a premium book from a discounted one.
The largest single normalization in this band is owner compensation — the add-back to a market-rate replacement is what turns reported profit into the Pro Forma EBITDA a buyer prices. The companion financial & transactional mechanics reference walks the full bridge.
What BPS measures. The Best Practices Study tracks the operating and financial results of top-performing agencies nominated and designated through the study, segmented by revenue tier. This brief reflects the $2.5M–$5M band in the 2022 edition (calendar 2021 results).
Percentages of net revenue. Expense, compensation, and revenue-mix lines are expressed as a percentage of net revenue unless a dollar figure is shown.
Average and top quartile. The average is the segment standard; the top quartile is the aspirational stretch the study reports alongside it.
Frequency. The study publishes annually. Milly Books refreshes this brief with each new edition.