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Given that the average life of an offshore company is five years, a formation agent taking 0 in year one can expect to receive

Given that the average life of an offshore company is five years, a formation agent taking $500 in year one can expect to receive $1,600 more later (though this must, of course, be shared with the jurisdiction).This income stream makes the business attractive to private-equity firms, though some remain queasy about investing in a business with a sometimes questionable reputation.Returns depend largely on whether the provider offers services beyond straightforward company formation, which tend to boost margins but require more highly skilled staff.

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Given that the average life of an offshore company is five years, a formation agent taking $500 in year one can expect to receive $1,600 more later (though this must, of course, be shared with the jurisdiction).

This income stream makes the business attractive to private-equity firms, though some remain queasy about investing in a business with a sometimes questionable reputation.

,600 more later (though this must, of course, be shared with the jurisdiction).

This income stream makes the business attractive to private-equity firms, though some remain queasy about investing in a business with a sometimes questionable reputation.

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Prices rise to £5,000 for more sophisticated corporate structures in places like Switzerland and Luxembourg. Almost all the providers are privately held and reluctant to give details of their trade.

But interviews with some big ones (mostly on condition of anonymity) paint a picture of an industry buffeted by a regulatory assault but still churning out healthy returns.

SEARCH online for “company incorporation” and you'll be spoilt for choice.

Hundreds of so-called formation agents ply their trade online, offering to set up companies, trusts and foundations cheaply and discreetly, with minimal fuss (and in some cases minimal documentation) almost anywhere in the world.

The wholesalers, such as Hong Kong-based Offshore Incorporations Ltd (OIL), sell companies to legal and accounting firms, banks, corporations and also (often in bulk) to web-based resellers.

Martin Crawford, the chief executive, says reputation is crucial in this market segment.The number of companies it handles has grown every year since it was founded in the mid-1980s, says Mr Crawford.An attractive feature of the industry's economics is the annuity-like income generated from renewals.Most of the industry's financial accounts are as impenetrable as the shell companies they peddle, making it “very hard to benchmark performance,” sighs Mr Eaton.He thinks the mass incorporators work on margins of 5-10%, rising to 25-30% for bespoke firms that do advisory work and estate planning.It is subject to familiar commercial forces, such as globalisation (the rise of the Asian client) and consolidation (arranged in some cases by buccaneering private-equity firms). Even totting up the overall number of providers is difficult, partly because some do this only as a sideline. But a large offshore financial centre will typically have 80-120 corporate smithies, the World Bank reckons.

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