How to navigate trail book buying and selling in today’s market

Q. For those new to the concept, what exactly is a trail book, and how does buying or selling one work?

A trail book is the ongoing stream of income a broker earns from their lender partners, generally paid monthly, based on the loan book they manage. When a broker sells their trail book, they’re essentially selling the rights to receive that income in the future.

The process involves valuing the trail book, agreeing on a sale price, and transferring the rights to the buyer, who then receives the trail payments instead.

Q. Why is trail book activity ramping up at the moment?

Right now, brokers are operating in a high-cost environment, with softer settlement volumes in some markets. For some, that means cash flow pressures. Selling part or all of a trail book can free up capital to reinvest in the business, pay down debt, or even take a break.

On the flip side, buying a trail book is a way to quickly scale up revenue, without having to wait years to organically grow a client base.

Q. What kind of brokers are looking to sell their trail books right now?

There’s quite a range. Some are nearing retirement and want to extract value from the asset they’ve built. Others are pivoting into different careers or industries. And then there are brokers who simply want to restructure their business or free up cash for other opportunities. It’s not always an end-of-career decision – sometimes it’s a strategic move mid-career.

Q. How is a trail book valued?

There’s no one-size-fits-all formula, but most valuations are based on a multiple of the monthly trail income. That multiple depends on several factors: age of the loans, run-off rates, growth, clawbacks, and so on.

We’ve seen sale multiples range from 1.9–3.7 times annual trail range – it all comes back to the quality of the trail book.

Q. What does the due diligence process look like for a buyer?

It’s critical to dig into the quality of the trail book. That means looking at the lender spread, the age of the loans, the average loan size, the run-off rate, and any concentration risks. You want to understand whether the income is stable and sustainable.

You also need to assess the client relationships, even though the payments come from lenders – retention often depends on the broker maintaining good client service.

Q. Who typically buys trail books?

Often, it’s brokers or broker groups who want to accelerate their growth. Buying a trail book can be more cost-effective than spending the time and marketing dollars to win new clients one by one.

We also see groups that want to expand geographically, diversify their lender mix, or gain exposure to a certain type of client base.

Q. How does a broker go about financing a trail book purchase?

Banks typically don’t like lending against trail books because they’re intangible assets – there’s no property or plant to secure against. That’s where we come in. At TrailBlazer Finance, we specialise in lending to brokers. We can lend up to a high LVR on the trail book’s value, with repayments structured in a way that aligns with the income the trail book generates. That means the asset you’re buying can help fund its own purchase.

Q. Are there risks brokers need to be aware of before buying?

Yes, the biggest risk is that the trail income you thought you were buying doesn’t continue. Loans can discharge, refinance elsewhere, or go into arrears. Changes in lender commission structures can also impact income. Plus clawbacks – you don’t want a clawback for an upfront you never received… That’s why due diligence is so important and why we often help buyers stress-test the book before purchase.

Q. What are your top tips for brokers looking to buy a trail book?

1. Do your homework to understand exactly what you’re buying.
2. Make sure the price reflects the quality and risk.
3. Have a clear plan for how you’ll engage and retain the clients in the book.
4. Use financing that matches the asset’s cash flow – don’t overstretch.

Q. What are your top tips for brokers looking to sell a trail book?

1. Get your compliance and data in order, as buyers will look closely.
2. Don’t wait until the last minute – plan your exit so you can maximise value.
3. Consider whether you want to sell the whole book or just part of it.
4. Work with advisers who understand the market – it’s a niche area!

Q. Why are trail book transactions worth considering now?

Trail books are one of the most valuable assets a broker will ever own. Whether you’re buying to grow or selling to unlock capital, getting the timing and structure right can make a big difference to your long-term success.

In today’s market, being proactive about those decisions can give you a real strategic edge.