A Bail Bondsman retires by the use of his/her buff fund and possibly the sale of their company. Throughout there years of doing business, they will have put a decent amount of money in to what’s called a buff. Every bond that is written, a portion of the fee or premium goes in to the buff fund. When the bail bondsman retires, they may pull from this fund, but only if a few things are in place, i.e. liability.
Most of the jobs out in the corporate world have components of savings or retirement funds for the employees involved. Working for a corporation usually provides this in the form of a 401K. Sometimes the corporation matches the individuals investments. None of this is offered in the bail bondsindustry unless you are working for a very large company, and there really aren’t any, so retirement monies are the sole responsibility of the individual.
The buff fund is only available to the owner of the company in most cases. Sometimes the bail agent may work for an employer that has an agreement with them that they get a portion of the buff fund, but its rare.
Can the Bail Bondsman retire at any time? Yes. Can they retire at any time AND get their buff fund returned to them? No.
Getting all of the buff fund can happen in two ways:
One: Over the years a bail bondsman writes thousands of bail bonds. Some of these bonds get exonerated and some don’t. Some of the bonds have cases that are still ongoing and some have other situations associated with them like; collateral or deeds that are still outstanding. If at the time the bail bondsman wants to retire, he/she still has outstanding bail bonds, they can not reach in to the buff and retrieve their monies. Well, technically the bail bondsman can, but their surety (the insurance company that backs them) will have legal reasons why they can not. So as the bail bondsman gets closer and closer to the date of retirement that they choose, they continue to work on their outstanding bail bonds to get them exonerated. Once they are all exonerated, the bail bondsman has no more outstanding liability and can retrieve their buff fund and be on their way.
Two: As a bail bondsman continues to build their business, they can develop an exit strategy. The exit strategy is to be bought out by another bail bonds company. Along the way a bail bondsman underwrites bonds. A good exit strategy is to write the least risky bonds available. Of course, this is a good strategy for a company seeking to achieve longevity also. The least risky bail bonds that are written, the better their liablity ratio will be and the more attractive the company will look to a possible investor. As the date of retirement closes in, the owner can start advertising that their company is up for sale. Bail Bondsman are always interested in purchasing other bail bonds companies, but, if the investors do their due diligence and read through all the bonds and see that the portfolio is fairly risky, they won’t want to participate. They might bargain a little and exclude the real risky ones, but that’s not what the retiring bail bonds company wants. So how does the retiree get their buff fund? They don’t. At this point in time there is still many outstanding bail bonds out there, so the buff fund needs to stay in place for the new owner. The buff fund has double duties; possible retirement fund and as a backup for forfeited bonds (bonds that the defendant has skipped on). The foreited bonds need to be paid in full to the court if the defendant can not be retrieved, that money is pulled from the buff. The way the retiree gets paid in this scenario is the new owner is going to buy the old owner out.
The business has value in many ways; the amount of the buff fund, the intrinsic value of the company from its position in the marketplace (how strongly branded it is, how strongly its been marketed, its online presence, all values pertaining to what kind of future business it can create, and the value of the bonds that aren’t exonerated (some of these still have payments to be made on them). So, the new owner will take all this in to account and put up an offer over and above the actual value of the buff fund. Say the company is creating thirty calls a day due to their online and offline presence, that has a calculable value, add that to the total payments that are still due and add that to the total amount of the buff fund and you have the amount the new owner should provide for the sale of the bail bonds business. Once this happens, the old owner can retire and if they did well in building their business, they will be able to retire on monies that are larger than their buff fund.