Business vs book valuation

Clarify whether you are buying a client list (book, valued on trail or recurring revenue) or a scalable business (valued on EBITDA). If more than ~30% of revenue relies on the founder personally, it is usually treated as a book.

Recurring revenue quality

Review client age profile and loan terms. Younger clients and longer loan terms usually support higher long term value. An older client base or loans near expiry reduce future revenue potential.

Product diversification

Check how much revenue comes from associated products such as insurance or KiwiSaver. A diversified book is more resilient and more valuable. KiwiSaver often has the highest lifetime value.

Clawback risk analysis

Analyse historic clawbacks by lender, product type, and adviser. High early repayment or clawback rates increase risk and may justify lower multiples or staggered payments.

Past performance and persistency

Review persistency, especially for insurance products. Stable, long term client relationships and low lapse rates support higher valuations and more confidence in future income.

Data format and CRM

Confirm that client data is held in a structured CRM (for example, Trail) with clean, complete records. Scattered spreadsheets or manual files increase risk, transition cost, and data issues.

Systematisation and processes

Look for clearly mapped processes across the full client journey, from lead generation through to annual reviews. The business should not depend on one person’s memory or personal style.

Staff efficiency and value

Compare headcount and roles to revenue and volumes. An adviser supported by a very large admin team with modest throughput may indicate inefficient processes or unsustainable cost.

Key staff retention

Identify key people and check what is in place to retain them, for example retention bonuses or employment agreements. Sudden staff departures can erode value very quickly.

Client servicing history

Review how consistently clients have been serviced post settlement, for example annual reviews, refixes and check ins. Poor servicing increases the risk of client attrition after the sale.

Sale and purchase agreement

Use a professionally drafted agreement that clearly covers what is included in the sale, warranties, restraints of trade, handover obligations, and dispute processes.

Product provider transfer protocol

Confirm how each provider will transfer trail commission and servicing rights. Ensure they receive and acknowledge the signed agreement so future commissions are paid to you.

Data migration timeline

Agree a timetable for receiving data and provide it early to your CRM provider so the migration can be completed with minimal downtime or client impact. Four weeks prior to the transfer date is a reasonable time frame.

Seller involvement and handover

Negotiate a defined transition period where the seller stays involved, for example in a consultant or part-time role. This helps with client introductions and stabilises revenue.

Payment structure

Consider staggered payments that are linked to realised revenue, with adjustments for clawbacks or client losses. This can align incentives and reduce your downside risk.