Business Context and Reporting Period
Reliance Global Group, Inc. (NASDAQ: EZRA) filed a Form 8-K on September 2, 2026, reporting the entry into a Material Definitive Agreement. The Company, through its wholly owned subsidiary Southwestern Montana Insurance Center, LLC ("SMI"), agreed to sell its Montana insurance operations to Scali, LLC (dba Scali Insurance Group). The transaction is structured as a combination of an equity purchase and an asset purchase.
Key Financial Metrics and Transaction Terms
- Base Consideration: $2,625,000 in cash, payable in full at closing.
- Valuation Multiple: 8.75 times pro forma EBITDA.
- Pro Forma EBITDA: $300,000 (used as the baseline for the valuation multiple).
- Contingent Consideration: Additional payment equal to 8.75 times the amount by which EBITDA exceeds $300,000 for the twelve-month period from September 1, 2026, to August 31, 2027.
- Cap on Contingent Consideration: None (uncapped).
- Closing Date: Deemed effective September 1, 2026, for accounting purposes; actual payment required by September 11, 2026.
Material Changes and Transaction Structure
The Company is divesting 100% of the membership interests of SMI and 100% of SMI's book of insurance business and tangible/intangible assets. Following the closing, SMI will become a wholly owned subsidiary of the Buyer. The filing does not provide comparative financial data for the prior period or specific revenue/profit figures for the Company as a whole, as this report focuses solely on the transaction agreement.
Outlook, Risks, and Management Commentary
Management anticipates benefits from the transaction, including the receipt of proceeds and potential additional consideration. However, the filing includes standard forward-looking statement disclaimers noting that actual results may differ materially. Key risks identified include:
- The risk that anticipated benefits of the transaction are not realized.
- The risk that the Additional Consideration is not earned or paid.
- The subordination of the Company's right to receive Additional Consideration pursuant to a Subordination Letter Agreement.
- Conditions precedent requiring SMI's managing directors to enter into agreements with the Buyer.
Investor Verification Checklist
- Verify the successful closing of the transaction and receipt of the $2,625,000 base cash payment by September 11, 2026.
- Monitor the EBITDA performance of the divested business for the period ending August 31, 2027, to determine eligibility for uncapped contingent consideration.
- Review the Subordination Letter Agreement to understand the priority of the contingent claim relative to other obligations.
- Assess the impact of the divestiture on the Company's remaining revenue streams and liquidity position in subsequent 10-Q filings.