This brief captures the 2024 Best Practices Study profile for the smallest revenue tier. Read against the 2022 profile, it is the band where the study's sharpest warning shows up in the data. Every figure here is a segment benchmark; the companion 2024 BPS tier reference explains how the tiers compare, and the year's narrative is the 2024 context.
§ 01 · ProfitabilityProfitability & the Rule of 20.
Profitability actually rose year over year — a 26.6% Pro Forma EBITDA (up from 23.9% in 2022) on a light 49.6% compensation load — and the Rule of 20 of 24.3 clears the threshold. The margin is the comfortable number; the growth numbers below are the worrying ones.
| Metric | Average | Top quartile |
|---|---|---|
| Pro Forma EBITDA margin | 26.6% | 34.1% |
| Pre-tax profit | 22.4% | 33.3% |
| Rule of 20 score | 24.3 | 30.6 |
| Total Pro Forma compensation | 49.6% | — |
§ 02 · Revenue mixRevenue mix.
Still the most balanced book of any tier — commercial and personal lines sit almost level, with the heaviest personal-lines exposure in the study.
| Line | % of revenue |
|---|---|
| Commercial lines | 43.5% |
| Personal lines | 45.1% |
| Contingent / bonus | 6.5% |
| Individual life & health | 1.9% |
| Group medical | 1.6% |
Revenue mix, at a glance.
A near-even commercial / personal split. Bar widths are exact percentages of revenue.
§ 03 · Growth & concentrationGrowth & account concentration.
Here is the deceleration. Net-revenue organic growth fell to 4.7% — roughly half the 2022 reading — the only tier to slow this sharply, and the data point behind the study's warning that small firms not investing in growth will be consolidated. Account concentration remains the heaviest of the bands.
| Metric | Average | Top quartile |
|---|---|---|
| Net-revenue organic growth | 4.7% | 12.8% |
| Net-revenue total growth | 5.7% | 15.5% |
| Top-10 accounts (% of commissions) | 16.3% | — |
§ 04 · ProductivityProductivity per person.
About 6.1 staff, with revenue-per-employee of $170,674 — a meaningful lift from 2022, the upside of a leaner headcount even as the book grows slowly.
| Metric | Average | Top quartile |
|---|---|---|
| Revenue per employee | $170,674 | $175,194 |
| Spread per employee | $100,625 | $95,734 |
| Total staff (average) | 6.1 | — |
§ 05 · Producer pipeline & stabilityThe pipeline read.
The defining number of the tier. The five-year producer success rate collapsed to 39.5% — down from 65.9% in 2022 — even as NUPP investment surged to 3.1% of revenue. The tier is spending more to develop producers and validating far fewer of them, with a 51.1 weighted-average producer age pressing the perpetuation question.
| Metric | Average | Top quartile |
|---|---|---|
| Weighted-average producer age | 51.1 | — |
| 5-year producer success rate | 39.5% | 100% |
| NUPP (% of net revenue) | 3.1% | 3.7% |
| Current ratio | 1.30 | 1.40 |
| Tangible net worth (% of revenue) | 13.2% | 26.0% |
- Margin held, growth didn't. Pro Forma EBITDA rose to 26.6%, but organic growth halved to 4.7%.
- Producer-pipeline collapse. The five-year success rate fell from 65.9% (2022) to 39.5% — the year's sharpest deterioration.
- Investment surged anyway. NUPP jumped to 3.1% of revenue — more spend, fewer validations.
- Most balanced book. Commercial (43.5%) and personal (45.1%) lines almost level.
- Heaviest concentration. Top-10 accounts at 16.3% of commissions.
- Perpetuation pressure. A 51.1 weighted-average producer age — the oldest of the bands.
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 smallest tier in 2024, the comfortable margin masks the real risk: organic growth at 4.7% and a producer pipeline validating fewer than two in five hires. A buyer reads a strong margin on a slowing, concentrated, aging-producer book as a discount, not a premium — and that gap is exactly where pricing separates.
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 under-$1.25M band in the 2024 edition (calendar 2023 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.