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Buying & Selling Insurance Books of Business

By: Jonathan Stertzbach

Disclaimer: nothing in this document is a formal offer or legal advice. This is just general knowledge based on market conditions for 2025. All parties must do their own research and due diligence before a sale or appraisal. This is a constantly changing market and everything is subject to change at any time.

Buying a Book of Business (BOB) is a risky venture- for both Buyer and Seller involved. There is substantial risk associated with clients not staying with the Buyer-Agent, the Medicare industry going under (completely or partially), contracts can be terminated or not transferred, clients not staying with the Seller-Agent, and the Selling Agent not being paid by the Buying Agent as agreed upon in a contract or offer. And, of course, there is the most important issue on the mind of any Selling Agent: that is the consideration of their beloved clients and how they will be treated and cared for after being sold to another agent/agency.

About the Author

My name is Jonathan Stertzbach. I am a transplanted mid-western Yankee living the second half of my childhood in New England. I have a good German name- but I am 100% red-blooded American. I had the good sense to move South at 18 years old for college and ultimately marry a Georgia peach. I am happily married to my bride Mandy, have two high school kids, and we run a family insurance business in rural, northeast Georgia (licensed in 10 states). We are awardwinning agents in our area and love this insurance agent community!

I used to be a full-time minister and pastoral counselor. I am a two-time deployed, disabled, combat veteran, having served with the famous 10th Mountain Division for two combat tours as an Army chaplain. I still do ministerial things, teach at a Bible college and seminary, and Mandy and I are very involved in our local church and missions. We combine the insurance business with our faith and purpose and have found great satisfaction in this venture.

Harsh Reality

One of the hardest things I have found in this business regarding Books of Business (BOB) and buying/selling them is that most people think their life’s work is worth far more than the actual value. Just last month, I had my house reappraised for a HELOC (Home Equity Line of Credit) after installing a stunning $20,000 stone-columned front entrance gate at our hobby farm/ranch. I was just SURE after paying into a home’s mortgage, numerous updates and renovations, that after 24 months (since my last appraisal) my house HAD TO be worth substantially more the appraisal than the last one.

You guessed it- Nope! You see, my perceived value of my home and its worth did not matter. What mattered were the home sale prices around me- what are homes my size and with my home’s amenities- what did comparable homes actually sell for in the past month or two? That is all that mattered to the appraiser and the bank. Wow. I was devastated and heartbroken. I was left to broker a closing based on the actual value of my home, not my perceived value.

After negotiating and appraising numerous such deals for myself and other agents, most BOBs are far overvalued by the Seller than what they actually sell for as a sale’s price. Rarely, some people can retire off such a sale as this. Those that ‘hit it big’ in a company sale are because they offer a company with substantial value above and beyond their BOB. For most people, the average BOB will get .75X to 1.5X1 of their annualized renewable commissions.

Consider this: if I ask 3X for my BOB in a sale to another agent or agency, that means another agent would have to work for three years without profit, assume 100% of the risk and attrition of clients leaving, dying or moving, and navigate changing markets and legislation. The average attrition rate for a BOB agency/agent is 20%. This means before I pay off the BOB, I could have lost 60% of the BOB’s value in three years!!!

It is possible that some markets have huge disruption, refuse to pay agents commissions, back out of certain product types all together, and basically force me to accept all of the risk associated with a business. Unless your business is a unicorn covered in pure gold, this is probably not going to happen. Most people I consult decide to strengthen their BOB and work a few more years before they decide to sell.

If you don’t believe me, call an Insurance Book Appraisal Company or have a third-party agent ask you what they would pay today for your company (not appraise or value), but pay you cash today. Most companies charge 10-15% of a sale and broker a sale for you, which further lowers your profit margins at the time of sale. It’s the bitter reality of this business: your Book of Business is just not worth as much blood, sweat, and tears as you have put into it. Hopefully, this manual will help you get every ounce of value out of your life’s work and benefit you and/or a Buyer for years to come!

Factors to consider:

One of the first things I analyze in a Book of Business sale is the average age of the typical client in the Seller’s BOB. A BOB that has a median age of 67 is far more valuable than a BOB with the annual median age of 73. Supplement plans are typically not as valuable in a BOB sale as Advantage plans. I love to offer a multiple of the annualized commissions (say I offer 2X – that is, 2 times the annualized commissions). In a deal such as this, writing a check is so scary- not knowing what the future holds or how good the BOB you are buying will perform in the future.

1 1X is the annualized commissions and renewals for an insurance Book of Business. 2X would be the annualized commissions and renewals times 2 (200%) of the Book of Business. 3X would be 3 times (300%) the annualized commissions and renewals. If I have a BOB that is 100 active clients, and the 2026 annualized commission/renewal is $347 per client, a 1X sale would be $34,700. A 2X sale would be ($34,700 x 2) = $69,400.

Did you know many companies will not allow a sale or limit a sale to a new BOB owner? Sadly, buying BOBs is getting more and more difficult, and that is taking away a lot of the profit on the final offer of the BOB. Not only could the insurance company limit or not allow client transfers, but individuals also insured may or may not choose to move over to new owner. There are whole blocks of business that can delay, change, or ruin a potential deal. Sadly, because a sale like this is often a moving target, people get their feelings hurt and a high percentage of these deals end up in court or other legal proceedings. Many other deals that do not end up in legal proceedings have one party getting hosed financially and eating the cost of a deal or a portion of a deal gone bad.

Data and records are paramount in this business. Part of the due diligence period is examining records and data. The more data and the more accurate the records, the more valuable the Book of Business. Is your Customer Relationship Management (CRM) software part of the sale? Most buying agents have their own CRM and will not care to use your processes. This includes, but is not limited to: CRM notes, biographical information, Scope of Appointments, recordings, applications, etc… We at Stertzbach Advisors use Go High Level and Go Guru to maintain our information as a CRM.

Medicare Supplements can often be very hard to transfer to a Buyer. Since these require so few ongoing training requirements, it is probably better to retain these clients than to try and sell them. Another option for Medicare Supplements, due to their lack of flexibility with many carriers, is for the seller to keep the contracts in his/her name and just pay the buyer the renewals (this is called an Assignment of Commissions). These Supplement contracts typically pay for 7 years, and a very light commission for years 8-10. Some contracts pay lifetime commissions (Anthem for example), but this is usually only 1-2% after the first 6-7 years.

Is any portion of the BOB bi-lingual, non-English speaking or hearing impaired compatible? If you have staff that are fluent in foreign languages or American Sign Language, this is a great value to any company. Staff may or may not be considered as part of a business sale. The hard part of acquiring and keeping staff is that with a two-week notice any staff member can transition out of a company. Take good care of your staff. Be more loyal TO them than you expect FROM them.

Pricing a Book of Business

Typically, a Book of Business containing Advantage Plans is worth more than a book of just Medicare Supplement plans. Affordable Care Act (ACA) policy retention is so low that this may or may not benefit a buyer. Stertzbach Advisors does not currently buy any BOB containing ACA clients (however, we would be willing to consider a deal with another agent as part of this sale, and you could sell your ACA clients to another agent or partner at the point of sale). If you wish to sell the ACA BOB separately, that can be considered but is not optimal.

Many companies choose to not just buy the BOB but to also buy the business model (as a whole) and all intellectual property and royalties. This is where REAL value is added to a company.

Marketing programs and materials are as valuable as gold in this business. Rarely will a business owner let a website, click funnel program, webinar, book or magazine royalties go cheaply. Staff, real estate, vehicles, storage, office furniture and all such assets need to be considered in a sale or considered being sold separately as a separate deal.

If the Seller is asking for a one-time cash price payout, the final price will be less than a payout would be over a short period of time (typically 1-3 years). As a general rule, the higher the initial down payment, the lower the final price of the BOB. Typically, the longer the payout period for the Buyer, the higher the end sale price.

The typical price for a Book of Business is 1-2.5x annual revenue (very few ever sell for more than 1.5X), depending on many subjective factors. This price is usually lower if paid out one time in cash and can add up to a higher price tag if the payout is over a 1–3-year period (or longer). If your business asset is the BOB alone, this is a fairly-standard, going rate for a BOB with good product lines and annualized commissions. Anything over 2X is a higher-thanaverage price.

Should an amiable price be difficult to find, third-party companies can do a written appraisal or estimate. Other agents like yourself can make an offer on what they would pay or consider for a sale price, and there are many ways to price a business with insurance appraisers. Other fellow agents estimating the worth of a business are much more cost-effective, while an appraisal service company can often be 10-15% of the final sales price of the business itself. A third-party company appraisal would be much more data and detailed intensive versus a personal quote from another ethical agent and what they might offer for such a sale.

I hear this question all the time: Well, I have a friend who got 6-10X the price of his/her BOB. Why is my BOB priced so low? Remember, just the typical BOB price tag is around 1-2.5X (annual commissions). Software, trained and licensed staff, data, CRM, Intellectual property, royalties, marketing, real estate and many other factors must be taken into consideration if buying the business as a whole. While 6-10X high price tags are possible, they are highly unlikely unless your business is growing substantially from valuable collateral, self-referrals, inhouse marketing, a superbly well-trained team, and has a fabulous retention rate of clients.

Sometimes, companies seek to improve their own BOB value by buying other BOBs as company financial assets. This term is referred to as “fluffing” or “fluffing the books”.2 Corporate companies do this all the time. Before companies sell, they often buy as much business as they can, operate as lean as they can on staff, and “fluff” the numbers in the near-term to reflect a much more positive image and price tag than normal for their business. You as a Seller can benefit from a company attempting to do this. You can also ‘lose your shirt’ if you ignorantly buy from someone exiting a company like this. Buyer beware!

2 I cannot claim credit for this term or idea. This comes from my friend Keith Nabb in an interview with Brook Beasley on her podcast about Buying and Selling Books of Business. He also speaks of this concept in personal dialogue and consultation. Keith is an excellent reference regarding this subject matter and is an honest and ethical agency owner here in Georgia.

Example

Imagine this for a reference point: 2X sounds reasonable. BOB: 200 active Advantage clients. The Seller wants 50% down payment and wants the rest of a cash deal paid out after the next Annual Enrollment Period (AEP) on March 1. Sounds like an easy deal and fair deal, right? If anyone offers you a deal like this- take the check and run away as fast as you can ��

Here are some of the problems I see with a “supposed simple deal” such as this:

1) The Buyer is essentially working for two years without a paycheck.

2) The Buyer assumes ALL of the risk in this scenario.

3) 50% capital is tied up in a deal immediately, with only a promise of a return in the future (annual renewables).

4) 20% attrition year-to-year is the typical industry standard for Medicare Advantage plans. Poorly run businesses or call centers have a much higher attrition rate than even this 20% rate.

5) I cannot think of any financial lender who would say this is a wise and sensible investment. I would never loan private equity monies for a contract like this.

6) Disruption in the market (plans cancelling options), plans going non-commissionable, Medicare sales agents going away all together, etc.… This is unlikely, but it is possible. Commissions can be lowered, and whole segments of the market could go away or become unsustainable. Imagine if Medicare Supplements either went away completely or became unaffordable? Imagine if Stand-Alone Prescription Drug Plans completely exited your market- and your Medicare Supplement clients were left to fend for themselves year-to-year during AEP?

7) The renewal rates on commissionable policies could go down.

8) Artificial Intelligence (AI) could gradually replace all of us.

9) Elon Musk could make all of us slaves to his robotic race, forcing half of us to space and the other half of humanity underground. (Okay, I am just seeing if you are still reading and paying attention). No intended offense to Elon Musk! ��

Other Sellable Assets to Consider:

 Brand name or branding

 Training programs

 Former owner retention/involvement for a year or two

 Employees and their skill levels

 Marketing that produces royalties or self-generates new business

Sadly, not all insurance carriers make selling your BOB easy. We at Stertzbach Advisors find some companies to be problematic and not to be considered in negotiations for purchasing or selling a BOB. It is recommended that you either keep these carriers out of your BOB sale or

negotiate payments from you (Seller) to the Buyer for these contracts. This is typically far from the optimal situation for both parties involved.

Cigna Healthcare (Advantage or Supplement) is not a product that we wish to buy. Unless you are in our upline or downline chain of command-Cigna will typically not allow this. While it could be possible for you to retain the Book of Business and pay Stertzbach Advisors directly, we typically do not favor such transactions.

Many Medicare Supplement plans have peculiarities that make them difficult to acquire or sell in the present market.

 Mutual of Omaha can require every client to sign a new AOR form.

 Manhattan Life is very inflexible in transferring clients.

 Aetna and Cigna Supplement plans are not typically flexible, nor do they have good success in transferring to a BOB Buyer. Aetna typically requires each client to sign a release to allow a new Agent of Record (the Buying Agent). This can be quite problematic and transfer rates can be low in these scenarios.

 Allstate is another company that will usually not allow transferred clients to a new BOB.

 Many United Healthcare contracts only allow the Book of Business to be sold or transferred once.

 If you are a Guaranteed Trust Life broker- these plans will most likely have to have an Assignment of Commissions as part of the sale. I loathe Assignment of Commission types of transfers. I find that these end up quite often in legal proceedings and hurt feelings between Buyer and Seller. I avoid them at all costs.

Any of these contracts and companies can change their transfer processes at any point. These guidelines can often vary by state and carrier, and your Agent Level with your FMO/IMO. Read your carrier contracts. You will be amazed by what is in there that you initially overlooked when contracting with them years ago.

Legal Considerations

There are many legal considerations that could potentially come into play with buying a BOB.

1) That the Buying Agent might assume legal responsibility for ten years from the point of sale and would be charged with their E & O Insurance or vice versa with the Seller. This is a considerable risk in buying or selling a BOB.

2) Non-Disclosure Agreements are very important for both parties.

3) Non-Solicitation Agreement by the Buying or Selling Agent would be very appropriate and would vary by state law.

4) Letter(s) would (and should) go out from the Selling Agent stating they have sold the business. If the buyout is over a 1–3-year period, the Selling Agent should stay and protect both the Selling Agent’s and Buying Agent’s interest in the retention of clients.

5) If a Selling Agent gets a one-time cash payout, how much assistance do you think they will give you after the point of sale?

If it is in writing and my lawyer signs off, I am good, right? Wrong! Anyone can sue anyone else for anything in America. Our society is so litigiously obsessed- everyone is suing or threatening to sue everyone else. It can cost tens of thousands of dollars to make a contract whole. Imagine if a Buyer or a Seller defrauded me out of $20,000- but it cost me two years and $15,000 of legal fees just to pursue this injustice? You see the point. Not all legal battles are worth the cost or stress of engagement. I don’t like complicated, expensive deals and I am very unlikely to trust just anyone. You decide your comfort and risk levels in this legal arena.

All record documentation and transfer of clients must be signed and completed before there is ANY payment between buyer and seller in a deal with Stertzbach Advisors. This process can take 3-6 months, or longer if there are any hiccups or speed bumps along the way. Some companies (like Aetna) may require each client to voluntarily submit a form to move to the new Buying Agent’s Book of Business. I would never, ever give any money to a Seller upfront without any clients changing hands into my BOB or asset column (outside of earnest money or a good faith down payment). Even then, I am cautiously optimistic- hope for the best and prepare for the worst.

There may be (and often are) multiple payouts over 6-9 months- because not all carriers will transfer their BOBs clients in the same manner or timeframe. This is very frustrating to both the Seller Agent and the Buyer Agent. Poorly written Offer Letters, Letter of Intent’s and contracts sadly end up in court quite often. Those deals that do not end up in court often end up with the Buyer or the Seller taking a substantial loss or acquiring the BOB back after a botched attempted transfer. Sadly, I see this all the time.

Agent Level

In considering your Book of Business sale, your level as the agent (or agency) plays a vital component in how the Book of Business is transferred. Mandy and Jonathan are listed as Street Level agents, and we are Licensed Only Agents (LOA) underneath Stertzbach Advisors. The transfer of clients will drastically differ according to carrier, and FMO/IMO. Sadly, all transfers and sales must be approved by the insurance carrier and your FMO/IMO.

If the Seller is NOT affiliated with YourPlanChoice LLC (formerly AmeriLife) then they would need to work with the carrier (through their FMO) to complete a Business Transfer to us. The insurance carrier (specified in the Agent Contract) will provide their process to the Seller. Once the business transfer is completed (when YPC receives the business and commissions), the business will be linked to Stertzbach Advisors as the writing agent and the commissions will pay out to the seller’s agent/agency at the agent level.

If the Seller IS affiliated with YourPlanChoice LLC (formerly AmeriLife) then we (Stertzbach Advisors and YPC) will need to know who it is first to review your contract and determine how (if possible) we can transfer the business to Stertzbach Advisors as the new writing agent. As a result of an approved transfer, Stertzbach Advisors will receive commissions at the Agent Level.

TPA (Third Party Agreements) and other contracts can affect the way a sale is conducted, due to uplines and downlines and general ownership. Typically, the Selling Agent must keep the

Buying Agent in the upline and downline process of the Book of Business sale. This is determined by the carrier when a transfer request is submitted. This gets really tricky. Insurance carriers love TPA arrangements because they can stay out of a lot of day-to-day busy work. This can also include carrier transfers- TPAs are just so much easier for a company and provide them less headache. They are horribly complicated for little people agents like us.

Timeframe & Expectation

In our experience, these deals typically take 2-3 times longer than any human would comprehend! A handful of insurance companies will transfer your BOB in less than three months. I have seen some transfers take over a year or longer to complete. Be realistic in your expectations.

Most sellers are ready to sell right away, want cash up front, 3 times the value of the BOB, and they want the transaction done next week. This is probably not going to happen. Be ready to be flexible and make sure you trust the other agent in the deal to do what they say. At the very least, have a rock-solid legal contract and put everything in writing. Rarely do these deals ever close without some hiccups or headaches along the way.

What About the Seller’s Clients that Do Not Transfer?

This is where negotiation becomes essential. An Assignment of Commissions is possible, where the Selling Agent just pays the Buying Agent to manage the Book of Business and pays the Buying Agent the commissions. Another option for the Seller is to allow access to their BOB by the Buying Agent and pay per client rewritten or reacquired during subsequent AEPs or an AOR Letter Campaign.

NEVER assume, just because you have a client in your BOB, that it will easily transfer to another agent/agency in the event of a sale or death of an agent. God created all men equal- our FMOs and insurance carrier partners made some more valuable than others. Even if you are selling to another agent that writes at your level- and every client is an active Advantage plan client- you still may have a percentage of clients that will not transfer under any circumstance.

Brokerage

Please also consider that if we are unable to come to a sale or agree upon terms, Stertzbach Advisors does brokerage sales for other agents for 5% of the cost of the business at final sale. We prefer to buy companies outright ourselves but would happily consider this after due diligence should our agreement not go forward. This is a possibility and may be a potential blessing to you as the Seller.

We would basically act as a real estate agent when selling a house or property- potentially bringing a buyer and seller together and helping facilitate the sale and offer. Your FMO/IMO would help you facilitate the actual acquisition of the Book of Business. As a fellow agent, I can help you value and price your agency or BOB and give you an estimate of what we would value or sell your business.

Creative Financing and Buying Ideas

Earn Out Agreement: an earn out agreement is an arrangement between a Buyer and a Seller in a sale transaction where the Seller receives future payments contingent upon the business achieving specified performance targets or financial goals after the sale.

 These payments can be linked to metrics such as revenue, annual commissions, EBITDA, retention, expansion, or other Key Performance Indicators (KPIs).

 Earn outs are often used in mergers and acquisitions to negotiate the difference between the Buyer's and Seller's valuation of the business. This is also a great tool for sales negotiations.

 The payment is mostly paid in cash (could be company stock or dividends), depending on the terms of the sale. This is a future benefit for a Seller but involves greater than normal risk.

 This type of deal can increase the final price tag AND give great tax advantages if structured properly.

I am a HUGE fan of this type of arrangement. This can help to align the interests of both parties and can provide the Seller with additional compensation if the business performs well post-sale. Stertzbach Advisors is remarkable at operations, so this deal can allow me a chance to front little to no money and make a Seller happy with a higher-dollar deal value in the end. After all, if you think your business is worth a lot of money in the future, you as the Seller could get more money and this is an example of “put your money where your mouth is”. This transfers some of the risk of the Buyer to the Seller to help motivate a profitable near-term future for both the Buyer and the Seller.

Infinite Banking Concept (IBC)

The Infinite Banking Concept is a way that individuals finance money through borrowing against whole life, dividend paying, mutual fund companies. You can borrow against most whole life insurance policies if they have cash value, but IBC policies are designed to allow for borrowing while the whole amount invested still earns interest and dividends for you tax-free. Nelson Nash came up with this concept and became the first one to popularize the idea. This is sometimes called “overfunded life insurance.” Many companies like Pampered Chef, JC Penny and others started with personal loans from individuals wanting to better themselves. Want to be like the Rockefellers? Invest and reinvest in life insurance like this.

Home Equity Line of Credit (HELOC)

Do you have a mortgage? Do you pay extra, hoping to save a few pennies at the end of the mortgage? To me, the paid off home mortgage is still zero. All that money saved is just sitting in your house, not moving, not gaining interest, not being efficient. Although quite controversial, this type of investment strategy basically takes a large portion of the equity in your home and redeploys the money into your business.

Instead of having to fill out countless forms and show seemingly infinite amounts of financial data to borrow from a bank- you can often borrow up to 80-85% of the equity in your home and buy a BOB. I love that these types of loans are “simple” interest and not “complex” interest. You will almost always pay a higher Annual Percentage Rate than a traditional mortgage- but you have more flexibility and can deploy much more money to the principal of the loan so much faster.

Retirement Accounts

I like tax-deferred investment vehicles. I LOVE tax-free investments. No matter what we invest in- we borrow against personal and business assets we can leverage for greater benefit. Some 401Ks allow you to borrow up to 50% of your cash value in an account. A Solo 401K definitely allows for this- but you must be self-employed. The guidelines are not always easy or without complication- but if it’s possible, don’t you want to know how to do this? I borrow against a Solo 401K and pay myself the interest back into my account! Of course, there are limits and guidelines on what is and is not allowed by each company managing the account for you.

Conclusion

As one can conclude, these BOB transfers and sales are complex- and require much forethought and insight. Careful planning and communication are essential in considering a deal such as this and should be considered with much preparation and prayer. We wish you the greatest luck in your future as you consider buying or selling your BOB. The following Appendices contain some great information, simulation models, surveys and stories that may help you understand these concepts much better.

Please contact us at Stertzbach Advisors if you have any questions or wish to consider selling your BOB or company. While we (as a couple and agency) do Agency Consultations for a fee and broker BOB deals for other agents, we much prefer to make friends in the agent-community and do life together instead of formal business arrangements. We love fishing and camping! Don’t work too much- go on adventures and enjoy life!

We also strongly recommend that you have a Business Succession Plan (see Jonathan’s “other” self-help manual [e-book] or come to a local seminar training with us) for your BOB or agency as part of your estate planning. We would love to meet you. Even if you don’t live in Georgiawe love to travel this awesome country in our motorhome and meet other business owners like us. We often partner with people like you on big deals and slice up the pie where everyone gets a tasty slice.

We wish you God’s richest blessing and His outstanding abundance as you serve others!

Jonathan and Mandy Stertzbach

Stertzbach Advisors www.stertzbachadvisors.com (770) 525-7906

A brief survey to figure out if we are a good fit for one another. Some Sellers do not wish to write down their answers. I would never accept a survey from someone that is not in writing or recorded for a BOB sale.

1) Why are you leaving the insurance business or selling?

2) Do you have staff, intellectual property, branding, marketing or CRM software that you intend to sell with your business?

3) What is your product mix? Supplement versus Advantage, ACA, Dental, Vision, Hearing (DVH) products, life or final expense, etc… Who are your predominant carriers and product types that you sell?

4) What is your current retention rate from year-to-year?

5) Will you require an NDA (Non-Disclosure Agreement) or due diligence?

6) What is your annualized top-line income for your BOB?

7) How quickly do you want to sell and get out of the business? (Many companies take up to 6-9 months to transfer clients).

8) Are you willing to be retained for rare instances to encourage your current clients to move to the new BOB and Stertzbach Advisors?

9) Can you describe your record-keeping process? Do you have a Scope of Appointment (SOA) and recorded conversation for all phone calls since 2024?

10) Have you maintained E & O insurance? Have you ever paid out a claim to or exercised E & O insurance liability for a pay out?

11) Do you have any open-ended active complaints against you currently?

12) Who is your FMO/IMO, Upline, etc…

13) What marketing do you utilize and how do you find new clients?

14) Would you be willing to sell or retain a portion of your book should any part of this sale become difficult?

15) Do you have doctors and medicines for all your clients up to date within the past year?

16) How many active clients do you have today?

17) Do you have target lists that we can buy and market to? (This is VERY difficult after 2025 CMS Final Rule). I do not ever buy data in a BOB sale.

18) Do you have a Business Succession Plan, or is anyone else entitled to your BOB or company now or after your death?

19) Are you (or your BOB) in a Birthday State Guaranteed Issue state?

20) Are you seeking a one-time cash offer, or a payout over time for a higher value sale?

21) Do you have a prior offer or a formal appraisal by a neutral third party?

22) Were your current clients acquired through a face-to-face sale or through a means of telemarketing?

23) Is there any disruption with any carriers next year in your area of operations or plans/carriers that are discontinuing their service or products?

24) How do you currently get leads and market?

25) What are your retention and attrition rates for the past three years?

Appendix # 1

Jonathan is a speed reader, and perusing an agent community website saw an older man (late 60s, early 70s) advertising his Book of Business for sale. Jonathan’s problem is not inactionimmediately, Jonathan wrote to him and expressed interest. Via social media messenger, this man (let’s call him Joe- not his real name) wrote Jonathan and said he “wanted out.” He is sick and tired of all the disruption and political change, hates politicians and Washington, and that politicians have ruined Medicare! (Sadly, this resonated with Jonathan as true). Joe’s wife is sick, requires around-the-clock care, and Joe has a BOB around 350 clients. Joe sent 1099 forms and made $86,750 last year. Joe wanted 25% down payment immediately, 50% after the next AEP and then 25% the following AEP for a 2.5X deal. His BOB expands into two states, has 4-6 Advantage carriers, 2-3 Medicare Supplement carriers, about 25 D-SNPs, and about 25-30 Medicare Supplement plans, with a few scattered ancillary products for DVH, hospital indemnity and cancer riders. “I am ready to sign and close up shop today” Joe stated. Just give me an offer!” Joe even wanted 10-15% of what he called “Gratuity” above the cost of the sale- to send letters to his current clients and pass on leads to the Seller. Basically, he wanted a $210,000 deal paid out in 18 months. Wow! Okay pros- how do you evaluate this deal?

Analysis: terrible, horrible deal for the Buyer- AWESOME deal for the Seller. Sadly, I don’t think anyone in their right mind would pay anything close to this expectation.

First and foremost, Joe does not have 350 clients. Do the math. I don’t believe he had even 250 active clients. $86,750 divided by $313 per client (annualized commissions) is 277 clients. But not all of these were Advantage clients and some of this revenue is ancillary, stand-alone PDP and Med Supp. 250 active clients at best.

Even if the deal was a per client fee for ONLY clients that transferred, Joe was gonna be upset and let down. There is no way I would agree to a set price ($210,000) for a BOB ever! Even if I offered 1.5X for ONLY TRANSFERRED clients with a down payment of 20%, this is not a good Book of Business nor is it a good deal.

Follow Up: Jonathan follows up with Joe and asks what his retention rate was last year. 85% retention (or so he claimed). Joe’s records are not well kept and not accessible and his CRM is inferior- his BOB and client-base is not well tended, and he has 25 Cigna clients (will only transfer to someone in my upline or downline) and 25% of his book is Aetna (which may require an AOR transfer form from each client). All of Joe’s client sales are word-of-mouth referrals. Joe pushed for an offer letter and an earnest money payment in this phone call.

Final Offer:

Dear Joe:

At this point, my wife and I are going to back out of any interest in buying your business. I had hoped I could negotiate or find some kind of "earn out" agreement to

get us closer to our desired prices- but full cash payment within the first 2 years or so is beyond the scope of my current ability and typical business practices. 2.5X means basically that I would work for 2.5 years with no profit, assume all the risk, and who knows what CMS, Washington and local markets may or may not do. If I were in your shoes, I would do the same thing and want higher cash payments early in my sale. I am just not willing to deploy so much cash forward so quickly.

We really liked you and found your honest, direct approach refreshing. Your ethics are rare in this business. Thank you for being a beacon for younger agents following in your steps.

I do have many friends who I think may or may not be interested in a Book of Business such as yours. May I put them in contact with you?

I wish you great success in your upcoming retirement.

God bless Joe. I hope he finds a buyer. I hope he gets a good price. Maybe Joe will come back to me with a hail Mary, desperate offer. I hope not- I don’t want to negotiate with anyone who feels like they are losing their life’s work. I hope and pray that this man finds a Buyer, settles on a good and fair price for both he and the Buyer, and rides off into the retirement sunset.

Update: Joe did call me back. He came way down in price. I was unable to buy his book from him but made him a fair offer (1.5X over 18 months with 20% Down). I also referred him to two other buyers, neither one wanted the deal. He chose to go with a 2X offer, 50% down and 50% pay out after his next AEP from a local competitor. His FMO also offered him 1.2X over two years with no money down. I was delighted for Joe and made a great friend out of the experience. Joe now tells people that I am the most professional, knowledgeable person he know in this arena helping people buy and sell their BOBs. Thanks Joe! Happy retirement!

Appendix 2 True Story

J.D. (not his real name) got my name from a state sales director with a national insurance carrier. He told the sales director that he was looking for a younger agent (not too young) that wanted to buy a hot and “once in a lifetime offer”. Someone who was good at Customer Service and would take excellent care of his clients. When the lead was passed on to me, I gladly followed up and talked to J.D. on the phone. I liked him a lot. We knew a lot of the same people, and it was shocking that he and I had never met before we crossed paths so many times and never knew it.

J.D. claimed he was a “low tech-high touch” kinda guy. Translation: he was old-fashioned, hated technology, and refused to grow with the times. All of his people were face-to-face clients, hand-written applications all on paper and he met with each of his clients face-to-face during AEP and was getting run ragged. No CRM, paper files in a filing cabinet, had access to 5-6

Advantage carriers and 3-4 Med Supp plans. Roughly 70% of his BOB was Advantage, and about 30% was Med Supp. The average age of his client was over 72 years old.

My wife Mandy and I met J.D. for lunch between our house and his house. When “Barbie” (that is what the girls at church call her) stepped out of my pickup truck and I walked to the door in nice jeans and cowboy boots, ol’ J.D. assumed I was a dumb redneck with a hot, trophy wife. (He was right about the trophy wife part). We should have taken Barbie’s Ford Mustang convertible. His BMW was beautiful, and he was dressed like a Wall Street stockbroker. His arrogance was shocking- he was not mean, or condescending (yet). He had a book of business of around 120- and he thought he was one of the top agents in the state.

Mandy is so sweet and gracious. She politely listened and interacted with him, laughing at his jokes, and making him think he was such a good agent. I apparently had “that look” on my facebecause even though I said nothing, he fired at me: “when was the last time you wrote 50 or 60 policies!” I chuckled and said “I have written at least 60 policies in the past 90 days.” Mandy corrected me, “Hun, you have written 50 in the past two months alone.” J.D.’s eyes got big as saucers! I am a redneck- but not inept, and certainly a professional at my craft. Mandy is one of the most amazing humans u will ever meet- and top 1% of agents anywhere. Yeah… it got awkward. Lunch ended quickly, and J.D. said he would call me.

Follow Up

After a few e-mail follow-ups, he finally picked up the phone and acted as if he was doing me a favor. “What kind of offer do you have for me?” I was young- I was new to this business, and I was VERY anxious to do a deal and buy a BOB. Okay fellow agents- What would you have offered for this book? Cause I WAY OVER offered him a price for his BOB.

I explained that I had 10-20% cash down and wanted to consider a 2.5X sale over the next 5 years with an Assignment of Commissions. We would share 50% commissions with each other during AEP and the year, and this would allow him significant tax advantages in his older years. Mandy and I would do all of the work, and if we ever didn’t pay- he would revoke the Assignment of Commissions. A stellar offer, way too long on the timeframe and payout. Go ahead and judge me. I know it was fool hearty. I write this so YOU can learn from my youthful foolishness.

Final Offer

When I presented this offer to J.D. he didn’t cuss at me but came close. He started yelling and shouting, saying that was a “rip off” and I was young and naïve to think such a deal would ever be considered by a Buyer. I listened in disbelief, as he threw his temper tantrum, and virtually hung up on me. I never heard from him again.

Thank God I was rescued from that train wreck of a deal. I would have lost money, had to travel countless hours for face-to-face appointments, been locked in to a 5-year deal with a less than stellar agent, and just have been working with someone who didn’t really know what he was doing. God bless J.D. I hope he figures out what he wants, and I thank him for this valuable lesson. Tough lessons to learn- but good lessons.

Appendix 3 (Somewhat) True Story

I had an agent named Mike (not his real name) call me. I honestly don’t remember how I got his name or how we connected, but he was interested in either a consultation or a BOB sale. Very quickly, I learned Mike was a born-again Christian. The way he spoke of his wife was amazing. He cut the call short because he prioritized date night with her and had to go pick up the babysitter so she could get ready for their weekly date. Everything he did was for his wife and kids and Savior- this man was far from the average bear.

Mike came out of a very successful life insurance career, owned an agency that was kind of like a small call center, and built a BOB very fast. He had a lot of D-SNP clients over 20 states, 3-4 employees (had 10 or 12 at one point), and knew his business model was unsustainable. Mike and his team were phenomenal at sales- but operations was more difficult because they grew so quickly. Mike and his partner had borrowed a lot of money to make this business venture work and wanted to sell and go back to slower-paced life insurance and ACA sales.

I listened to Mike’s stories. I listened to him stop my call to lovingly tend to his younger children. What an absolute stud of a guy! I had a man crush on this dude- his character was simply Christ-like and humble as could be. He told his successes- he told me his failures. Basically, he needed a lot of cash infused into his business so he could be set free from the rat race. Lots of money was coming in- but lots of money was going out too.

Now, as you read this story- THIS is the kind of guy I want to partner with and either buy or build a company. Mike was so honest and genuine, you could not help but be honest and genuine back to him. I told him the truth- “Bro, I just paid off ALL my debt but my house and have little to no cash reserves until next AEP.” Dang it- I felt a spiritual connection with this remarkable husband and father. He needed the money. I didn’t have it and I couldn’t quite get it fast enough. He is strong at sales- Mandy and I are stellar at operations and system structures.

I called another insurance buddy. Ken (not his real name), I have a situation here. GREAT guygood deal, I just cannot make it happen in the timeframe he needs. Are u interested? Ken said he would check in to it. Ken gave me some of the best business and life advice money could buy. Except he didn’t charge me. Well, he made me buy lunch�� Come to find out one of his friends or partners made an offer on the deal. I want good people and ethical agents to partner together and help this market get better and better. I don’t give away deals like this- I typically charge a 5% broker and finder fee to introduce a Seller to a Buyer.

(Now everything from this point on in the story is partially true or fictitious as no one shared any specifics with me about the deal. I assume and deduce these facts based on multiple conversations from numerous people- and the point of this story is to learn from it. Whether it is true or not, let’s learn from the story and not focus on the minute details (that may or may not be true).

Mike calls me later. “Hey buddy. You got a min?” I answered, “I always have a minute for you. What’s up?” I am afraid my deal may fall through. It is a bunch of smaller deals bundled together into a huge deal and is an “earn out”. Basically, I think the Buyer paid in 40% down, 40% during the next AEP- and if the business sustained its retention would pay out 20% as an “earn out” at 1.5X (these numbers are totally fabricated for the sake of learning). My Buyer is getting distant and doesn’t seem as excited as he once was. Of course, I am 100% in on this deal until it falls through- but, what should I do if the financing for my Buyer falls through?

I wanted this deal. I trusted this man and loved his transparency and honesty. Any man who would honor and respect his wife like him has got to have the finest character. I also knew I was tapped out financially until next AEP. What would you do if you were me in this scenario? I prayed with Mike. I encouraged him that God has already gone before us- and his “plans are to prosper us and not to harm us”. I was totally honest with him about where I was and how I could and couldn’t contribute to a potential future process.

Of course, Mike would never back out on his current deal. If I could find Mike one buyer, why couldn’t I find Mike numerous buyers? Imagine his book of 1200 people spread over 20 states. It’s like 20 pieces of pie- some bigger than others. Why can’t I sub-divide his BOB, get him the cash from other people and I do all the leg work and elbow grease for the deal? If he would take 40% down, that is all I would need to fund before next AEP.

Think about it: all I have to do is come up with 40%, do a 20% “earn out” payment next year, and subdivide his Book of Business among numerous agents. I can afford the 40% payment after AEP, and my BOB will grow 75% if I could keep all 1200 clients. Dang, that is a lot of money. Where am I gonna find 5-10 trusted agents who want to fund a deal and grow their Book of Businesses? Look in the mirror. It’s YOU! I am not looking to defraud or take advantage of anyone. I am looking to make a few ethical, outstanding agents richer because they serve their Medicare clients at the highest level. Everybody wins.

I want you to consider working with other agents like you, of like mind and practice and principle, and buy up these available Books of Business. Whether you work with me or not, I want the little man (or woman) to prosper. I hate seeing these huge money corporations get all the deals and hand us the crumbs and the leftovers. I want the highest standards of honesty and customer care to be given to our beloved clients, and I want all of us to “taste and see that the Lord is good.” I want business owners that serve their clients and their employees to reap in the abundance of ethical business. No crony capitalism. I am okay with capitalism- but to serve others and exhibit the highest ethical ideals and morals in this business.

Enjoy this free book. It is my gift to you. My life insurance agents, Joe, Brie and Brent have a philosophy that has stuck with me- give away as much as you can and see how much comes back. Some people say it’s karma. Some people say it’s luck. I think God blesses those who serve Him, and so the boomerang has been thrown. Throw your own boomerang, give away something of great value (like this book) and see if it comes back to you.

I wish you life’s richest blessings.

Serve others. Work hard. Make many memorable adventures. Love your spouse and your family. Eat some good food. Seek after God. Emulate Jesus.