Ten tips to get your brokerage ready for sale

by AB14 Apr 2014
Selling the brokerage you have spent many years building up can be emotional and hard if you do not have a checklist as a guide to maximise your business assets.

“If a seller of a mortgage business cannot easily identify some basic but critical aspects of their business, then it’s going to be hard to sell,” said John Birt, principal of merger and acquisition experts Radar Results.

Firstly, you need to know your trail book numbers inside out.

“Potential buyers want to clearly understand what they’re buying, the likely run off of loans over time and the opportunity to contact clients to value add with complimentary services,” said Northern Beaches mortgage broker Sean Richardson.

“Secondly, and more importantly, the opportunity cost of the likely yield in comparison to other forms of income stream.”

Ten tips – these questions need to be answered in order for a potential buyer to make an offer:
  • How many clients do you have and how many own multiple mortgaged assets?
  • How many are people who occupy their own home in comparison to property investors?
  • Can you easily calculate the mix between fixed and variable rate loans together with the fixed rate maturity dates?
  • For those property investors, when does their interest only period finish?
  • What is the average loan or borrower life of your CRM?
  • What is the annual maturity profile of the CRM for loan reviews?
  • Who are your top 10 mortgage clients and what business risk do these pose if they were to discharge?
  • What is your average loan size?
  • Is one or a handful of lending institutions dominating your lender panel? Is this a business risk?
  • What is your geographic spread? Do you have concentration risk in one particular location?