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The importance of succession planning and valuing your business

jeremy fisher jeremy fisher
Jeremy Fisher 4 minute read

It’s only when mortgage brokers leave their businesses that succession plans are implemented, but brokers can benefit from knowing their options and having a plan in place.

Succession planning is an important aspect of the business as it’s part of a crucial period in the business cycle – that being maturity. When a brokerage is operational, brokers are mostly focused on the business income by way of upfront commissions and trails. When it comes time for the business owner or shareholders to take a step back or exit the business, succession planning and valuations are paramount. 

Having been in the mortgage broking industry for 12 years, I’ve seen the sector grow significantly. I became increasingly aware of several older brokers who were looking to sell their brokerages and who found that the traditional method of calculating the market price seemed to undervalue their businesses.

Currently in the market, brokerages are generally valued at a multiple of 1.5 times their loan book value. This valuation doesn’t take into account the longevity of the client list or the goodwill in the business. As this traditional method undervalues brokerages, I felt that there was room for a new group to move into this space and offer a fairer value for brokerages, so together with other industry experts, we formed The Broker Group.

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The Broker Group values businesses using higher multiples than the current industry standard in order to represent what the business is worth as a going concern. Brokers looking to exit the industry can implement their succession plan and be paid for their business. There are also brokers who would like to remain in the industry who can sell part of their business for business, investment or personal use.

Having multiple income streams within a brokerage, such as home loans, insurance and financial planning, is beneficial for a business in general, but when a succession plan is implemented, a business that has proven to be robust and resilient over its lifetime will be more valuable.

 

 

The importance of succession planning and valuing your business
jeremy fisher
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If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.

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jeremy fisher
Jeremy Fisher

Jeremy Fisher

Jeremy Fisher, director and founder, 1st Street Home Loans

Jeremy Fisher is one of the most awarded mortgage brokers in the industry and winner of the Australian Broker Association’s prestigious ‘Australian Broker of the Year’. Since 2001, Jeremy has settled in excess of $750 million worth of property loans and delighted clients with exceptional results and highly personalised service.

 

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