Consolidation could double trail book value

by Ben Abbott19 Dec 2011

Brokers will be the first to benefit from rapid industry consolidation through increases in trail book value, according to MoneyQuest.

Chairman of the online hybrid broking group, Ross Begley, said mortgage brokers can benefit by 'branding up', to make themselves part of 'the next wave of growth' for the mortgage industry.

He said brokers who align themselves with a national brand can expect a valuation double that of the standard trail book valuation most independent or stand-alone operators receive.

The higher valuation would be assisted by having infrastructure around them that provides leads, quality CRM and assistance with compliance, he argued.

Recently the industry has seen a wave of consolidation, with Market Intelligence Strategy Centre data last year showing a 25% decrease in active broker businesses.

Begley said that experienced brokers seeing declines in income and an increased administrative load due to the NCCP should be the first to join a consolidated model.

MoneyQuest is basing its statement on a standard trail book multiple of 1.2 - 1.4 times.

Related stories:

Bigger aggregators not always better: Paratore