Price for “book of business”
I have an opportunity to buy a “book of business” from someone. How do I know how much to offer?
One of the biggest factors in determining a fair price for a “book of business” is the estimated retention rate of clients.
“Done properly, with an earn-out in which the seller helps transition the book, client retention rates will be 90% or better,” according to Wealth Management, “Without that gradual and organized transition, retention rates will fall to 40% to 60%.”
Once you know roughly how many clients will continue through the transition, you can use prior revenue statements to determine the value of the client-base. Baystate Business Brokers has an excellent article diving a bit deeper on the subject.
Hope this helps!
You must be logged in to reply to this topic.
Not signed in?
Sign in to participate on our website!
355 Lexington Avenue, 18th Floor
New York, NY 10017
Disclaimer: We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. We recommend that you consult with your own lawyer, accountant, or other licensed professional for relevant business decisions. Click here to see our full disclaimer.
Product or company names, logos, and trademarks referred to on this site belong to their respective owners.