I sold a book of supps 3 years ago to Access. Approx. 200, I got 2.5 years of renewals.
Looking to Sell My Medicare Book of Business!!
- Thread starter Phillyinsuranceguy17
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That seems like a very strong price to pay.
Was there NO recourse for any cancellations? What about a client that you had on a plan for 3 or 4 yrs and there was only 2 to 3 yrs remaining of comm's to be paid with the current company? I've never really understood how the purchaser comes out on this type of a deal, but great for you elder; glad it worked out.
I' would imagine that you would have had an infinite "NO solicitation clause" to any of those clients?
- 11,280
elder said:
Even at 2.5 it doesn't seem worth it especially if you can't ever roll them. Do you regret selling them?
- 9,744
You bring some interesting points to light...
Any savvy buyer will insist upon a portion of the purchase price being "held back" (in an escrow account if an "all cash" deal) to guarantee performance, and account for the stuff that falls off...mysteriously or not-so-mysteriously...
Suppose revenue is $10k & expected to run for 4 years. Value at 20% discount rate is $25,887 which ~ 2.5 years. Implicit in the calculations is a 20% reinvestment rate. Anything less brings the seller's value down.
Seller ostensibly received 20% on the revenue but relinquished anything after 2.5 years. Buyer has a prospect list but no relationship and little information about the prospects. If seller would call all clients and introduce buyer, that would help the buyer but would probably result in more sales and lessen the reason to sell.
All depends on perspective.
Seller ostensibly received 20% on the revenue but relinquished anything after 2.5 years. Buyer has a prospect list but no relationship and little information about the prospects. If seller would call all clients and introduce buyer, that would help the buyer but would probably result in more sales and lessen the reason to sell.
All depends on perspective.
Regrets, sometimes, but for what I recieved and what I did with it, no. I was supposed to continue with the service, and if they needed moved I had a contract with Medico thru Access to move them, I was paid $75 for each client I moved to Medico.
Most of them were very old, and Obamacare was coming. I took a chance. I don't know if I would do it again. However, I am looking at retiring from this business next year, and may shop it out again, if the opportunity I am waiting for happens. I will know this January.
Not a very tight contract with Access, very straight forward, no teeth. Book was only a year or two old, some less than a year.
Most of them were very old, and Obamacare was coming. I took a chance. I don't know if I would do it again. However, I am looking at retiring from this business next year, and may shop it out again, if the opportunity I am waiting for happens. I will know this January.
Not a very tight contract with Access, very straight forward, no teeth. Book was only a year or two old, some less than a year.
Unless he sold it as a stock with the company owning the revenue stream.
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I have been told you could make a case for sale of a businss where it may be taxed with capital gain or sale of commissions taxed as income. Since Access has an actual copy of each and every customer name, address, policy info, stream of income from commissions, and access to billing and current information, my contention is I sold the book of business, which would make it subject to capital gains vs income.
I make no claims to know which is correct. BTW I sold a book of final expense to Access. They paid me 3 years of commissions, paid me 80% upfront and held back 20%. If the persistency is at least 80% at the end of the year they give you the 20%. You keep serviciing the customers.
Apparently final expense drop off the most in the first 4 years. If your book of biz is 4+ years or older they told me it's a pretty good chance you get the 20% back; otherwise maybe maybe not...they were pretty straightforward and fast. I would do it again.
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