MPA takes a look at how brokers can sell their trail books to raise capital to fund their business expansions.
Trail Book Buyers receives enquiries from brokers seeking to sell their trail books for a number of different reasons. Some brokers are simply looking to exit the industry and selling their trail book is a part of this exit strategy. Others are looking to raise capital to expand their business, fund other opportunities or pay down debt.
Whatever the reason Trail Book Buyers is able to accommodate any broker seeking to sell their trail book even if they do not wish to part with their clients.
Over the next few weeks, MPA will take a look at different scenarios of transactions completed by Trail Book Buyers.
Scenario 1: Raising Working Capital
Trail Per Month: $2,500.00
Type: Mortgage Broker
Location: Melbourne
We received an enquiry from a Melbourne based broker who had experienced a tough 12 months and needed to raise funds in a hurry to settle some financial difficulties and give themselves some time to get back on their feet. Although they had made alternative plans to raise the funds needed they preferred the option of selling their trail book.
A deadline existed in which the transaction had to settle and settlement funds received which gave us just 9 business days from the initial enquiry to settle the transaction.
Even we were unsure that the transaction could be completed this quickly. However with a motivated seller, an acceptable offer on our part (one that was slightly above market), our standard paperwork and process we were able to provide an outcome that all parties were happy.
Transaction timeframe:
28 May 2013 – Phone enquiry received from broker looking to sell their book
28 May 2013 – Received trail statements
31 May 2013 – Received rest of the information
3 June 2013 – Offer made for trail book
5 June 2013 – Contracts issued to vendor
6 June 2013 – Due diligence completed
7 June 2013 – Book Transferred - Transaction Settled
Q&A:
MPA: What should a broker be prepared to ask in the initial phone call? What information should they have handy?
TBB: Generally we wish to know the circumstances of the seller. Why are they selling? What will they be doing after they sell the book ie. will they be remaining in the industry, retiring, and obviously the details of the book they are selling such as the general area the clients are located within, the aggregator, the amount of trail per month and whether they have client information.
MPA: What do you do with received trail statements?
TBB: In order to assess the book we need to know the makeup of the book and how it has performed over time. So we ask for the most recent trail statement and a historical comparison usually a statement from 12 months ago. This allows us to see the concentration, types of lenders, drop-offs and amortisation of the trail book.
Other information we require includes the corporate information for preparation of contracts. Once received we issued agreements and conducted due diligence.
MPA: What does your ‘due diligence’ involve?
TBB: The due diligence for this particular deal was quite straightforward. The main steps we took were:
a. Company search to verify owner of the book and business;
b. Review introducer agreement between the broker and their aggregator;
c. Conduct searches online to make sure there are no red flags in relation to the broker
Based in South Yarra, Victoria, Trail Book Buyers operates an Industry Buy/Sell Facility that provides Mortgage Brokers and Financial Planners with a simple, safe and effective channel to buy and sell trail and fee books. The team has decades of experience in the mortgage broker industry and over 15 years’ experience buying and selling loan books.
Whatever the reason Trail Book Buyers is able to accommodate any broker seeking to sell their trail book even if they do not wish to part with their clients.
Over the next few weeks, MPA will take a look at different scenarios of transactions completed by Trail Book Buyers.
Scenario 1: Raising Working Capital
Trail Per Month: $2,500.00
Type: Mortgage Broker
Location: Melbourne
We received an enquiry from a Melbourne based broker who had experienced a tough 12 months and needed to raise funds in a hurry to settle some financial difficulties and give themselves some time to get back on their feet. Although they had made alternative plans to raise the funds needed they preferred the option of selling their trail book.
A deadline existed in which the transaction had to settle and settlement funds received which gave us just 9 business days from the initial enquiry to settle the transaction.
Even we were unsure that the transaction could be completed this quickly. However with a motivated seller, an acceptable offer on our part (one that was slightly above market), our standard paperwork and process we were able to provide an outcome that all parties were happy.
Transaction timeframe:
28 May 2013 – Phone enquiry received from broker looking to sell their book
28 May 2013 – Received trail statements
31 May 2013 – Received rest of the information
3 June 2013 – Offer made for trail book
5 June 2013 – Contracts issued to vendor
6 June 2013 – Due diligence completed
7 June 2013 – Book Transferred - Transaction Settled
Q&A:
MPA: What should a broker be prepared to ask in the initial phone call? What information should they have handy?
TBB: Generally we wish to know the circumstances of the seller. Why are they selling? What will they be doing after they sell the book ie. will they be remaining in the industry, retiring, and obviously the details of the book they are selling such as the general area the clients are located within, the aggregator, the amount of trail per month and whether they have client information.
MPA: What do you do with received trail statements?
TBB: In order to assess the book we need to know the makeup of the book and how it has performed over time. So we ask for the most recent trail statement and a historical comparison usually a statement from 12 months ago. This allows us to see the concentration, types of lenders, drop-offs and amortisation of the trail book.
Other information we require includes the corporate information for preparation of contracts. Once received we issued agreements and conducted due diligence.
MPA: What does your ‘due diligence’ involve?
TBB: The due diligence for this particular deal was quite straightforward. The main steps we took were:
a. Company search to verify owner of the book and business;
b. Review introducer agreement between the broker and their aggregator;
c. Conduct searches online to make sure there are no red flags in relation to the broker
Based in South Yarra, Victoria, Trail Book Buyers operates an Industry Buy/Sell Facility that provides Mortgage Brokers and Financial Planners with a simple, safe and effective channel to buy and sell trail and fee books. The team has decades of experience in the mortgage broker industry and over 15 years’ experience buying and selling loan books.
