I know someone who wants to get out of the biz and move across the country. They have a 22 mil book. My biz is 90% fee based and was jw what you thought a fair valuation would be for these assets

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Not enough information. What is the books recurring revenue? $22M locked into 10 year EIAs is worthless. It’s all about recurring revenue for asset purchase. Annuity trails value around 1.5x, brokerage/MF trails are 1.5-2x, and fee based (RIA) assets are valued at 2-2.5x. It’s all about the rolling 52 weeks recurring revenue. Look for trends during your evaluation. If recurring is going down they could have taken money from recurring and put it in a large upfront annuity sale. You’d be surprised how many people cannibalize their own books when they know they are getting out. Big pops for them income wise but devalues their business

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I like to take a three year average in revenue X2. It will protect the buyer from the large last year (where they did that) and bring down that 12 month revenue. Also, if you add a 2 year sunset clause that requires them to stick around, that will help for those MF clients you can try and transition into fee based with the help of the retiring rep.

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Also keep in mind that you’d be buying those assets after a 9 year bull market. If returns are likely to be lower in the future then the revenue should be lower too

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Great point about 9 year bull mkt

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