AGENCY VALUATION: HAVE THE FUNDAMENTALS CHANGED? by Bill Schoeffler Which comes first, the chicken or the egg? Theres a general perception that agency value has been increasi...

Which comes first, the chicken or the egg? There’s a general perception that agency value has been increasing during the past few years. Bill Schoeffler explains why this belief is partially true and partly the result of a self-fulfilling prophecy.

During the past few years, there have been some notable acquisitions of agencies that seemed to push the agency value envelope. In some cases, banks were making their platform acquisition and thus willing to pay top dollar to their first acquisition of a large, well-run firm. In other cases, publicly traded firms were able to exploit their high price-to-earnings ratio to offer a high price to the seller.