Selling book

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May 14, 2005 11:34 am

If I have a $20 million dollar book of business that is mostly fee based,  does anybody know how I would come up with a good selling price, if I was going to sell to a company or another broker?

May 14, 2005 12:24 pm

I have heard of reps moving to a firm to create a "partnership" and having a prearranged time that they will stick around for and then bow out of the business, the package is salary and asset based so the new firm pays for the move and your partner gets the book after you leave, it should be win-win.

May 15, 2005 2:08 pm

any Idea what it would be worth,  or what I should ask for?

May 15, 2005 7:57 pm

This site may help you value your book. But keep in mind, it's just one opinion:


http://www.wsfinet.com/calculateWorth/default.asp


May 16, 2005 9:40 am

Look at: http://www.fptransitions.com/   That's a company that facilitates the sale & purchase of practices.

May 19, 2005 11:28 pm
cheesenip:

If I have a $20 million dollar book of business that is mostly fee based,  does anybody know how I would come up with a good selling price, if I was going to sell to a company or another broker?


You know it's interesting that this thread started on May 13th and only has 4 replys. Where are all you INDY reps that claim one of the reasons you shouldn't be at a wire house is because you can't sell your book. If it is so common to sell your book, then why aren't there more answers here?



May 20, 2005 7:05 am

I can't speak for anyone else but for myself, I haven't had the desire to sell my book.  Therefore, I can't answer the question.

May 20, 2005 9:46 am

Plus, I think the guy's question was answered already.

May 21, 2005 12:52 am
Oracle:
cheesenip:

If I have a $20 million dollar book of business that is mostly fee based, does anybody know how I would come up with a good selling price, if I was going to sell to a company or another broker?



You know it's interesting that this thread started on May 13th and only has 4 replys. Where are all you INDY reps that claim one of the reasons you shouldn't be at a wire house is because you can't sell your book. If it is so common to sell your book, then why aren't there more answers here?







I agree with Oracle. How come not more answers on how to price a book. If it's so common. (Selling a book.) Why not more answers. The answer is it's not that common.



BPD



P.S. If the question was answered, then WHAT was the answer?

May 21, 2005 9:40 am

Do you bother to read what others post?


I didn't think so.

May 22, 2005 2:10 am

Fool,



OK then, what could cheesenip sell his book for?



BPD

May 22, 2005 11:13 am

Do your own homework, stupid.

May 23, 2005 12:25 am

Man you guys sound like a couple of kids...  If you know then help out if not then, oh well.  I found out that depending on type of book you have, anywhere from 1.5-2.5 times book would be in the ball park.  That means a fee based $20 million dollar book at 1% would generate 200k per yer in fees.  So you try and sell for somewhere between 300-500k.  That would probably be divided between some upfront money and salary and so much each year until total amount is paid.

Jun 1, 2005 2:18 pm

I'm considering leaving AG Edwards after 8 years and pursuing a different career altogether (therefore not competing).  With 30 million in assets and a trailing 12 month production of $225,000, can I get compensated for my business, or am I just forced to walk away with nothing?


What are the legal repurcussions of selling a list of clients to a competitor, assuming my firm won't compensate me for any of my business?


Who can I talk with about this issue, an attorney, someone at the NASD?

Jun 1, 2005 3:45 pm

YOU CAN'T SELL YOUR LIST OF CLIENTS!  You will have to walk away with NADA.  PM Bill Singer. 

Jun 1, 2005 4:58 pm

General rule of thumb I was told was 100% of trailing 12 for brokerage and/or 175% for fee-based.  This applies to the independent model, not AGE...duuuuuhh...

Jun 2, 2005 9:58 am
notnick:

I'm considering leaving AG Edwards after 8 years and pursuing a different career altogether (therefore not competing).  With 30 million in assets and a trailing 12 month production of $225,000, can I get compensated for my business, or am I just forced to walk away with nothing?


What are the legal repurcussions of selling a list of clients to a competitor, assuming my firm won't compensate me for any of my business?


Who can I talk with about this issue, an attorney, someone at the NASD?



Edwards, like some wirehouses, may have a program for transitioning (selling) books to other AGE reps.  Typically these programs are in place for retiring reps.  If you haven't looked into that, that's the obvious first step. 


If that isn't a possibility, since Edwards fortunately is one of the very few firms (other than independents, of course) that allows you to take your book when you leave them, another alternative is to move to another firm where there's someone you would plan to take over your book and transition it to that person after you've moved.  If it's a wirehouse type firm you'd obviously first have to make sure they're open to that.  If it's an independent contractor b/d, then of course it's not an issue.


To maximize the value of your practice and to make it most attractive to whomever you'd be selling it to, you should plan on staying for a period of time so you have an opportunity to make a smooth handoff of your clients to the purchaser (i.e., no one's going to pay you much for just a book of clients where there's not been sufficient time for you to introduce the new rep to your clients and for some relationship to have been developed).  Since most purchases are done over a period of time (i.e., maybe an upfront payment of 1/3rd, with the balance on an earn-out based on actual revenues over one to three years), there is the regulatory question of your ability to receive those future payments when you're no longer acting as a rep.  I don't know the answer to that one, but perhaps someone like Bill Singer would have the answer and/or guidance on how it might be structured to minimize the effect of any possible regulatory issues.

Jun 2, 2005 12:10 pm

Duke #1,


Thank you, that's good information.  Being a "newbie" to this forum, this question may have an obvious answer, but how do I contact Bill Singer you referred to in your reply above?


Thank you.


Jun 2, 2005 3:18 pm

Bill has been a long-time contributor to these forums and you'll see a lot of his posts on the "Legal Issues" forum here.


CONTACT INFORMATION:
Bill Singer
rrbdlawyer@aol.com<?:NAMESPACE PREFIX = O />


917-520-2836


http://www.rrbdlaw.com


 


You could also "PM" through these forums, but I don't know how frequently he looks in.

Jun 2, 2005 10:34 pm

If I were going to buy your book, I would make an arrangement on a % basis of fee revenue for 3 to 5 years. Something like this: year 1: 60% to you, year 2: 45% to you, year 3: 35% to you. , ect..I would ask you to stick around for at least a year and a half, even if you were out of the office a lot playing golf ( or travel, or whatever). I would still want both of our names to appear on the client statement. I would do the majority of the work, just have you around for a smooth transition. Hope this helps, don't know if you like the answer.


I think someone would be willing to pay you cash, but what are his/her ethics? I would think that you would want to pass your clients to someone you trusted and could watch for a while. The new advisor would have to a have a similiar investment philosophy to yours and a similiar method of communicating to the clients, or the clients will leave because they don't like the "new blood".