This guide outlines how a book of business or parcel of fees can be sold. It is a recommendation that is not exhaustive nor purports to be complete. Different methodologies of sale may apply to different book of business sales. Please seek professional assistance and advice prior to finalising any documentation.
1. Decide to sell a Client Book / Parcel of Fees / Book of Business / Accounts
2. Brokers may charge a commission between 4% – 8% of the value of the book.
3. You will need to create a profile during registration by completing the following fields:
- Organisation (Not visible to others)
- Name (Not visible to others)
- Address (Not visible to others)
- Phone (Not visible to others)
- Email (Not visible to others)
- Username (Not visible to others)
- Password (Not visible to others)
4. Your Advertisement will be categorized by service(s) e.g. Mortgage Broking; and General Location e.g. Melbourne – East. It will also have the following fields to fill in:
- Title Create a title for your listing e.g. Parcel of SMSF Audit Fees for sale.
- Asking Price Providing the asking price will minimise enquiries from prospective buyers.
- Executive Summary This can include: a brief overview of services provided, type of clients, general location, competitive advantage and reasons for selling.
- Services/Products provided to clients List what is provided to clients focusing on the major income producing items first.
- Income Revenue field is mandatory. Also detail the revenue for the last 3 years explaining how it is comprised, e.g. trail & review fields, management fees, or brokerage fees. It is recommended that you also provide the YTD income. Note: The Revenue field is mandatory and will be used to calculate implied price multiple of book.
- Client Profile List the number of clients under segments. List under value bands or Funds under Management (FUM) of different services provided. Include the average age of clients. You can also provide general comments of major income producing clients. High Net Worth clients are in big demand.
- PROTECT CLIENT PRIVACY. DO NOT PROVIDE ANY PERSONAL DETAILS OF CLIENTS ON LISTING.
- Platform It is beneficial to specify the platform/software used e.g. XPlan, Coin, Midwinter etc. as an indicator of ease of migration.
- Other Information Use this field to provide any other information like your handover procedure. Providing more details will minimise the enquiries from prospective buyers.
5. Choose the type of listing. Featured listings appear on top of searches, are highlighted, and appear on the homepage on a rotating basis.
6. Preview and then publicise your listing. Buyers who have registered for alerts under the categories your listing falls under will immediately be notified.
7. You can maintain confidentiality during this process through the secure online messaging service. Do not reveal sensitive information until you obtain a Deed of Confidentiality.
Asking the following additional questions can help in determining appropriate buyers:
- Why are you considering purchasing more clients?
- How many years of experience do you have in the industry?
- What services do you currently provide or intend to provide?
- How many clients do you currently have?
- Have you acquired a client book before?
- What are your sources of funding?
- What are the details of your license?
- Which dealer group are you with?
- How are client funds held and who audits their account?
- What is your vision for your business?
8. Sample forms are provided here.
IMPORTANT NOTICE: This form serves as an example of a contract between a vendor and purchaser and must be adjusted to fit particular circumstances. No warranty of completeness is given. Please consult with a legal practitioner when completing it. Please contact us if you would like us to refer you to external competitively priced lawyers who are experienced in these contracts and transactions. It is recommended that you use professional legal advice during this process.
- Confidentiality Disclosure Agreement This is needed to keep details confidential with the prospective buyer when furthering negotiations.
- Final Contract This will be specific to your circumstances and should include the following details:
- Due diligence procedures
- Sale price and retention/claw back
- Restraint of trade/contact with clients being sold
- Introductions to clients
9. Once the due diligence is completed, settlement and handover occurs.
An initial deposit e.g. 5% can confirm the sale until final settlement occurs. The remainder of retained funds held in trust (e.g. 10%) will be handed over to the vendor if the specified percentage of clients remain after a certain period of time (e.g. 1 year).