Fair Market Value of a Group Health Block of Biz?

[ApexConsultant]

What do you guys think is a good multiple to pay for a book of business right now in this economy and with the Exchanges looming in 2014?

The book I'm looking at the owner wants 1.5 the annual revenue. I am thinking more of along the lines of 1.3.

Anyone purchase a book lately? What multiple did you pay? Was it a 1 time cash payment, or did the former owner let you finance the deal with them? What were the terms?

Thanks!
ApexConsultant

 

[somarco]

Depends on a lot of factors. In your case there is a strong relationship between you and your clients. I don't recall the average group size but groups under 50 lives, and especially those under 10 lives should use a smaller multiple.

If your block is like many, the revenue has shrunk over the last year or so. Good chance that trend will continue.

If so, you want to average the revenue over the last 2 years and then arrive at a multiple.

DC has no idea what they have done, or how any of this will work including the Exchange. The plan they have laid out on paper will not work in the private sector, so trying to figure out where we go from here is a crap shoot.

 

[ABC]

I think 1.3 x 1 up front is a fair offer.

You should let the principles know that you are taking a huge risk buying the block and you are!

Its very possible that block could be worth a lot less very soon. The MLR could reduce comp and that Jan 1st 2011.

Will the SBA loan on a health block?