Selling Without Exiting: Exploring Non-Traditional Exits for Mortgage Brokers

Hello to all my fellow brokers and industry enthusiasts,

Today, we’re talking about an unconventional approach to what may be on every broker’s mind at one stage or another: exiting the business. And, I don’t mean simply putting a “For Sale” sign on the door. Instead, we’re exploring the question: how can you exit your mortgage broking business without actually selling it?

Now, to some, this might sound contradictory. Isn't selling the business the exit strategy? Yes and no. Selling can certainly be one way to "exit," but there are strategic alternatives that allow you to retain ownership and continue to benefit from the business's value long after you step away from the day-to-day grind. We’ll explore some of these below, covering approaches that range from licensing your brand to transitioning into an advisory role.

Let’s jump into it.

1. Creating a Licensing Model: Expanding While Retaining Ownership

Licensing is a brilliant strategy if you’ve built a well-known brand in the industry, and your processes are replicable. Think of it as "franchising-lite." This model allows you to expand your brand’s reach while earning recurring revenue from licensees who leverage your established name, branding, and processes.

In essence, you’re sharing your brand and intellectual property with motivated brokers, who can use your methods to grow their own businesses. You step out of daily operations but still benefit financially through licensing fees or royalties.

Key Steps:

• Build and document a replicable process. This means everything: marketing, client management, compliance.
• Invest in brand development so that it’s attractive to potential licensees.
• Draft clear licensing agreements, ensuring that quality control standards are in place to protect your reputation.

2. Creating a Profit-Sharing Agreement: Letting Your Business Work for You

Profit-sharing arrangements allow you to retain ownership of the business while an experienced partner or team operates it, sharing the profits without requiring an outright sale. This approach is ideal for brokers who want to transition out of the day-to-day operations but are still interested in the business's long-term growth and financial potential.

These agreements are flexible, too. You could offer a profit share to a trusted broker or team leader already within the company, incentivizing them to perform well since their income directly correlates with the business’s success.

How to Implement:

• Identify someone with a vested interest in the business’s success – a current team member or potential external partner.
• Set a clear, transparent formula for how profits will be divided.
• Ensure clear documentation, outlining responsibilities, expectations, and dispute resolution.

Profit-sharing is about aligning incentives. When everyone is on board and motivated to keep the business thriving, it becomes a hands-off way to maintain a financial connection with your legacy.

3. Employee Stock Ownership Plan (ESOP): A Path to Employee Ownership

ESOPs give employees the chance to own a portion of the company, aligning their interests with the business’s success. In an ESOP, you transfer shares to an employee trust, which holds them on behalf of the employees. This creates a natural exit pathway as you gradually reduce your involvement and ownership while still benefiting from the business’s growth.

ESOPs are especially effective for brokers with a dedicated, stable team who feel a sense of ownership over the business. It offers a rewarding exit strategy by directly involving your team in the business's future.

Steps to Establishing an ESOP:

• Consult with an ESOP specialist, as these plans come with legal and tax considerations.
• Set clear eligibility criteria for employees, so they know what is expected of them.
• Define a vesting schedule to motivate long-term commitment.

With an ESOP, you’re not just leaving a business behind – you’re building a legacy by giving your employees a personal stake in the business’s success.

4. Transitioning to a Consultancy or Advisory Role: Become a Guide, Not a Driver

If you still want to stay connected with the industry, transitioning to a consultancy or advisory role allows you to share your knowledge while stepping away from day-to-day operations. This approach is great for those who want to continue to influence the business's trajectory without being directly responsible for its success.

Offering guidance to the new leadership team, or even to external companies, allows you to generate income based on your experience and wisdom. It also gives you the freedom to explore other passions or even semi-retire.

Key Actions:

• Decide on the scope of your advisory role. How hands-on or hands-off do you want to be?
• Draft a clear agreement with the business’s new leadership team, ensuring expectations are clear.
• Market your expertise to other brokers or industry players seeking guidance from a veteran broker.

The consulting route offers flexibility and keeps your industry knowledge relevant, even after your formal exit.

5. Building a "Family Business" Model: Passing the Torch Without Giving Up Control

For those with family members interested in the mortgage broking industry, passing the business to a relative is another way to “exit” while keeping the business in trusted hands. This approach lets you gradually transition responsibilities while keeping the business’s ownership within the family.

One of the main benefits here is that family members may be more invested in preserving the company’s culture and values. It’s an opportunity to maintain your vision and values through the next generation, offering a less formal but meaningful handover.

Steps for Building a Family Transition Plan:

• Define the roles, responsibilities, and timelines for the transition.
• Establish mentorship sessions to guide the family member through key responsibilities.
• Document your vision and operational guidelines to help ensure continuity.

Family succession requires careful planning, but when done right, it offers an exit strategy that maintains the family’s involvement while you move on to your next chapter.

6. Implementing Passive Revenue Streams: Automate Your Income

Passive revenue streams provide a “semi-exit” by generating income even when you’re not actively working on the business. These streams might come from partnerships, referral agreements, or online resources, like courses or e-books, that leverage your expertise without requiring daily involvement.

This approach lets you monetize the knowledge you’ve gained over the years, creating value for other brokers or clients while freeing you up to focus on your next venture – or to simply enjoy more personal time.

Ideas for Passive Income Streams:

• Develop training materials or online courses for brokers.
• Create a referral program, directing clients to trusted brokers and earning a commission.
• Write e-books or guides on specific industry topics.

Setting up passive revenue channels may require initial time investment but can provide a steady income without ongoing operational demands.

7. Setting Up a Management Buyout (MBO): Handing the Reins to Your Team

A management buyout (MBO) is a structured way to sell the business internally, usually over an extended period. It involves your team purchasing the business, either through financing or over time through profit reinvestment. This model allows you to exit with confidence, knowing that people who understand and appreciate your business will continue its legacy.

With an MBO, you typically receive compensation as ownership transfers, while the team takes over operational control gradually, allowing a smooth transition.

Steps to an MBO:

• Identify capable leaders within your team who are committed to the business’s future.
• Work with financial advisors to structure a buyout plan that benefits both parties.
• Establish a timeline for the transition, with clear milestones and performance targets.

An MBO combines the benefits of an internal handover with a structured exit path that allows you to step back at a steady pace.

In Closing: A Fresh Perspective on “Exits”

Exiting doesn’t always mean leaving it all behind; it can mean transforming your involvement. By considering these non-traditional exit strategies, you can enjoy the fruits of your hard work while ensuring the continued success of your business. Whether through licensing, profit-sharing, or family succession, each option lets you redefine your role, ensuring you’re financially rewarded without completely detaching from your life's work.

Remember, the goal is to work smarter, not harder, and to create a legacy that endures. Take time to consider which of these strategies resonates most with your personal and professional goals. If you'd like to discuss how 'selling without exiting' might look for you book a chat here ➜ [Discovery Call]

Here's to your success – in whatever form it may take.

Ash Playsted | GM Broker Performance | Recludo Group

About your Author

Ash is both a dedicated BUSINESS STRATEGIST and MINDSET TACTICIAN who relentlessly pursues his 'higher calling'. Ash been has been building businesses personally plus continuously learning for more than 40 years, all of it deep inside the Mortgage and Finance industry. He's written thousands of loans, hired and mentored hundreds of brokers and business owners, started, built, and successfully exited, multiple award winning Mortgage businesses himself. When he's not immersed helping clients create massive value you can find Ash with his loving family, including his wife Kaz, two children, two dogs, two cats and three parrots! Ash believes in keeping physically and mentally fit and is constantly developing himself through exercise of body, mind and spirit.