When valuing a Medicare business, it varies based on the type of business being sold. For instance, a Medicare supplement book of business might be valued at around 1X , taking into account the age of the policies, which typically pay for six years. For a PDP or ACA business, it could be valued at maximum 1X, and for a Medicare Advantage plan, it might be valued at 2X However, for existing agents, we might offer a bit more, say 3X due to our longstanding relationship with them. Additionally, factors such as payment terms—whether upfront or over time—also play a significant role in determining the business's value.
Absolutely, spreading out payments over time can be a strategic move, especially considering tax implications. In our experience purchasing businesses with over 700 clients, we've found creative ways to approach acquiring books of business. Personally, I prioritize accessibility to clients, ensuring I can reach them within an hour if needed. As for larger books of clients, like the 1000-client example, paying over time can indeed be more practical, considering the significant investment involved. It's not just about writing a check; it's about structuring a deal that works for both parties and ensures a smooth transition for the clients.
