Valuation Methodology

Understanding how title companies are valued is essential for any owner considering an eventual exit. While every transaction is unique, there are consistent frameworks and metrics that buyers use to evaluate acquisition targets.

Common Valuation Approaches

Revenue Multiple Method

The most straightforward valuation approach uses a multiple of trailing twelve-month (TTM) revenue. For title agencies, this multiple typically ranges from 1.0x to 3.0x revenue, depending on various factors including growth trajectory, market position, and revenue quality.

• 1.0–1.5x revenue: Smaller agencies, declining markets, or those with significant customer concentration
• 1.5–2.0x revenue: Stable agencies with consistent performance and reasonable diversification
• 2.0–2.5x revenue: Growing agencies with strong market positions and modern operations
• 2.5–3.0x+ revenue: Premium agencies with exceptional growth, strategic geography, or unique competitive advantages

EBITDA Multiple Method

Buyers often prefer valuing profitable agencies based on adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This approach better reflects the true cash-generating capacity of the business.

Typical EBITDA multiples for title agencies range from 4x to 7x adjusted EBITDA. "Adjusted" means normalizing for owner compensation, one-time expenses, and other items that wouldn't continue post-acquisition.

• 4–5x EBITDA: Smaller agencies or those requiring significant operational improvement
• 5–6x EBITDA: Well-run agencies with consistent profitability
• 6–7x+ EBITDA: Scale operations (typically $500K+ EBITDA) with strong growth prospects

Asset-Based Valuation

Less common in title agency transactions, but some buyers may consider the value of tangible assets, particularly if the agency owns real estate or has significant escrow balances that generate float income.

Key Value Drivers

Beyond the basic metrics, several factors can significantly impact where an agency falls within valuation ranges:

Revenue Quality & Composition

• Customer diversification: No single customer should represent more than 15-20% of revenue
• Channel mix: Balanced revenue across purchase, refinance, commercial, and builder channels
• Geographic spread: Presence in multiple counties or markets reduces local economic risk
• Revenue trend: Consistent growth commands premiums; declining revenue signals risk

Operational Factors

• Technology infrastructure: Modern title production systems, digital closing capabilities
• Staff quality and tenure: Experienced team that will stay post-acquisition
• Documented processes: Reduces integration risk and demonstrates operational maturity
• Compliance history: Clean regulatory record with proper controls in place

Strategic Factors

• Underwriter relationships: Strong relationships with tier-one underwriters
• Market position: Market share in key service areas
• Growth market presence: Operations in high-growth corridors command premiums
• Synergy potential: Buyers will pay more if clear cost savings exist

What Affects Your Multiple

Getting a Preliminary Valuation

While formal valuations require detailed financial analysis, you can develop a preliminary sense of value using publicly available benchmarks and your own financial statements:

1. Calculate TTM revenue from your most recent 12 months of operations
2. Determine adjusted EBITDA by adding back owner compensation above market rate, one-time expenses, and personal expenses run through the business
3. Apply appropriate multiples based on your agency's characteristics (see ranges above)
4. Consider both methods—the higher of the two often represents a reasonable starting point