Buyers agency valuations that separate the founder's following from the business a buyer can keep.

A buyers agency is valued on the earnings it can keep producing for a new owner, which depends on how clients arrive, how much fee income is already contracted, and how much rests on one well-known agent. Unlike a rent roll, most buyers agency income is earned purchase by purchase, so a valuer tests the engagement pipeline, repeat investor clients, referral sources and the cost of winning clients, not just last year's fees. Agency Valuations prepares fixed-fee written reports banded on total annual turnover: $1,495 + GST under $2 million.

How does a buyers agency earn its income?

A buyers agency, also called a buyers advocacy business, acts for purchasers rather than sellers. Its income usually comes from an engagement or retainer fee when a client signs, and a fee on a successful purchase. NSW Fair Trading notes that buyer's agents may charge a fixed fee or a percentage of the purchase price, and that the fee is negotiable rather than set by law. Some businesses add auction bidding, portfolio planning or property management.

That model differs from a rent roll in one way that drives value: most income is earned purchase by purchase. A buyer of the business is paying for its ability to keep winning clients and completing purchases, so the valuation looks forward at the pipeline and the sources of new clients, not just at last year's fees.

What drives the value of a buyers agency?

Each driver is tested against your records: client lists, engagement agreements, marketing spend and fee history.

• ·Founder dependence: how many clients engage because of one person's profile, media presence or social following
• ·Client sources: referral partners, paid advertising, social media and repeat clients, and what each costs
• ·Referral concentration: one mortgage broker, accountant or adviser sending a large share of clients
• ·Repeat investor clients who buy again, and clients who refer others
• ·The signed engagement pipeline at the valuation date, and how often engagements convert to purchases
• ·Fee model: upfront retainers, success fees, fixed or percentage fees, and refund terms
• ·Market spread: dependence on one city, one group of suburbs or one property type
• ·Staff: who finds, negotiates and settles purchases, their tenure and any restraints
• ·Brand assets held by the business, not the founder: domain, social accounts, content and client database
• ·Compliance record: licensing, conflicts declared and any complaints

Why is key-person risk so large in a buyers agency?

Clients often choose a buyers agent because of a person: the founder's reputation, a podcast or a large social following. If that person leaves after a sale, much of the client flow can leave too. The valuation has to separate goodwill that belongs to the business, such as systems, a team, a brand and referral relationships that would continue, from goodwill that follows one individual.

We set the founder's remuneration at the market cost of the work they do, then ask how much of the earnings would stay if they stepped back. Where the honest answer is little, much of the value may rest on the transition terms a buyer negotiates, such as an earn-out or a handover period. The report states how key-person risk was reflected so a buyer and a seller can both see it.

Which licensing and conduct rules affect value?

Income is valued where it was earned lawfully and can continue under a new owner, so licensing and conduct rules matter.

In NSW, a buyer's agent must hold a real estate agent's licence, or a certificate of registration and work under the direction of a licensed real estate agent. The agent must declare any conflict of interest and must not accept any payment for referring a client to a selling agent. In Victoria, a buyer's agent is a licensed estate agent, cannot act for a buyer and a seller on the same property transaction, and is appointed under a buyers' agency authority that sets out the fees. In Queensland, real estate agents must hold a licence, and a buyer's agent is appointed on the residential form 6 or the commercial form 6A, which sets out the services, the fees and expenses, and when they are due.

NSW and Victorian guidance tells buyers to ask whether an agent receives rebates or other benefits from third parties, so any referral income from lenders, builders or developers gets close attention. We check where it comes from, how it was disclosed and whether a buyer could continue it.

When do buyers agents need a valuation?

Common triggers include:

• ·Selling the business, or merging with another agency
• ·Bringing in a partner or an investor
• ·Giving a senior buyers agent equity or an option over shares
• ·A founder stepping back through an earn-out or staged exit
• ·Restructuring into a company, or moving the business to a related entity, where market value matters for tax
• ·A dispute between owners, through an expert report

What do we need from you?

You need nothing to enquire. After you engage us, we ask for:

• ·Profit and loss statements and balance sheets for two or three years, and year-to-date accounts
• ·Fee income by client for 24 months, split into retainers, success fees and other income, with settlement dates
• ·The signed engagement pipeline at the valuation date, with expected fees
• ·Where each client came from: referral partner, advertising, social media, repeat or direct
• ·Marketing spend by channel
• ·Your standard engagement agreement or authority, and any referral agreements
• ·A staff list with roles, remuneration, licence status and restraints, and the founder's role and pay

What does a buyers agency valuation cost?

A buyers agency, or shares in it, is banded on its total annual turnover, excluding GST: $1,495 + GST under $2 million, delivered in 2 business days; $2,495 + GST from $2 million to $3 million, 3 business days; $3,495 + GST from $3 million to $10 million, 3 business days; above $10 million, quoted in writing before work starts, with the delivery date agreed before commencement. An expert report for a dispute is $4,495 + GST.

Each past valuation date adds $495 and each additional entity adds $795. Delivery time starts once payment and all required information have been received. You receive an independent written report that follows the guidelines of APES 225 Valuation Services, signed by a suitably qualified business valuer. We value buyers agencies; we do not broker or sell them, and the report is not advice on whether to buy or sell.