Book for Sale in Florida Panhandle

What is a fair ratio? I am told that I have to be careful in giving too much cash upfront in case the book is poached. Is this the case

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He is not leaving the business nor the area and I am told to make the paper portion a decent amount in case their is some funny business. What is a good split 70 (cash upfront)/30 (financed)?
 
What is a fair ratio? I am told that I have to be careful in giving too much cash upfront in case the book is poached. Is this the case

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He is not leaving the business nor the area and I am told to make the paper portion a decent amount in case their is some funny business. What is a good split 70 (cash upfront)/30 (financed)?

Then why is he selling the book????

Paying someone who is going to stay in insurance AND in the area 100% cash upfront would be beyond idiotic. I'm sure he is as honest as they come, but there are too many that would roll the book on you as soon as the check cleared. I would simply tell him flat out, no. You can put it in escrow if he doesn't want to carry the paper himself, but to give him 100% cash upfront in this situation would be a very bad move.
 
Well if he wants all cash he will be more likely to finance 30% verses 50%. All you can do is ask. What multiplier of gross commissions is he asking for?
 
Yes, him staying in the business has made me very leary. He is asking for 1.5x

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I am thinking 70% cash/30% Escrowed over 12 months, is that a fair deal barring this situation?
 
Yes, him staying in the business has made me very leary. He is asking for 1.5x

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I am thinking 70% cash/30% Escrowed over 12 months, is that a fair deal barring this situation?

What is fair is what you agree on. I personally would want this to be more back end than front end.

Again I do ask, why is he selling if he is staying in the business? That makes me extremely suspicious there is something going on, or he is going to poach the business away from you.
 
Yeah, something doesn't see right. Although 1.5x isn't that bad. I know some agents are asking 2.5x to 3x in southern Florida. The stuff with Tapco and Hull is going to be agency bill making it more difficult to retain.

In a sense you are also buying appointments. You need to do some research to make sure the companies he has are competitive. If not, you are just buying a book that will slowly shrink.
 
THanks for the feedback.

According to him, he wants to focus on Commercial, but I myself have concerns because he does not want to do a escrow or a earn-out and wants majority on the front end.
 
He wants a low multiple, he wants it all up front, and he is going to stay in insurance...

That is a lot of red flags. Perhaps he just wants to be done with personal lines and doesn't want a lot so he can just wash his hands of it. Or perhaps there is more than what he is telling you.

Ultimately it is your money, but I'd be inclined to find another book for sale.
 
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