Considerations when buying an Accountancy Practice
View our current accountancy practices and fee blocks for sale.
Taking over an established practice can be a far less risky strategy than starting a practice from scratch, given that established companies already have a client base, proven track record and all the assets and expertise required to generate a regular income stream. Accountancy is one of the industries which may be considered more recession proof than others, given that companies will always require accountants to produce their end of year accounts or payroll, and tax returns still need to be completed whatever the economic situation. Buying into the accountancy industry represents a significant investment, and care must be taken to consider several variables before taking the plunge.
Location
The first factor which most people will consider when buying any business is where in the country they are located. Most of the large players in the accountancy industry have their corporate headquarters in London, but every town and city up and down the country will have a wide variety of different types of accountancy firms. Most investors are looking for a business opportunity within travelling distance of their current home base, as uprooting a family from Plymouth to Aberdeen is no small task.
Business Sector
Once the geographic location has been decided, the next decision concerns what type of accountancy business is preferred. Accountancy industry players range from a single person operation dealing mainly with tax returns and small business accounts, to much larger companies specializing in a specific market sector or dealing with auditing multinational corporations only.Medium sized accountancy practices are often “jacks of all trades”, meaning they are equally happy doing tax returns as they are auditing.
Budget
Geographic location and type of business will affect the third main factor, the price the business will be sold at. Very few investors have a limitless pot of money with which to buy a practice, and once the budget is established for the purchase, the number of suitable prospects can be narrowed down. It is also wise to have discussions about funding and finance at an early stage of the purchase process, as a buyer who has his funds in place is a more attractive purchase prospect than one who has yet to start the process.
Sourcing a Practice to Buy
Although it is possible to find the perfect accountancy firm to buy without external help, in practice this is difficult. Most investors will have other business interests as well, and searching through all of the accountancy practices on the market and evaluating them for suitability can be very time consuming. Using the services of a specialist broker such as us (accountancy industry specialist) can make the whole process far easier. The prospective buyer just needs to brief us about what sort of practice they are interested in buying, then sit back and wait for us to present them with a list of companies which match the criteria. Often, practices are not advertised on the open market as owners worry that clients and staff would desert them should they think the practice is soon to close. We are the ideal people to know of these companies and bring them to the attention of purchasers.
Briefing US
At the initial meeting with us, we will clearly identify the purchaser’s needs. This meeting will be easier if the purchaser has a clear idea of what he wants and what the budget is. We will take a full brief from the investor, and then present alternative options to see if there are possibilities elsewhere. We will also want to establish which of the criteria are set in stone, and which there may be some degree of flexibility with. There is no point presenting practices which are way out of a potential investor’s geographic comfort zone or budget and we will take this into account.
Valuation
Once a suitable practice has been identified, the next step for the purchaser is to register their interest with us. The first step in this process is to establish exactly what the business is worth, and set the price for the deal. Valuing an accountancy practice is as much of an art as a science, and once again we are the best person to assist will putting an accurate valuation on the business, taking into account factors such as turnover, assets, liabilities, future projections and goodwill. As professional accountancy industry brokers, we can help pull together all of the relevant material and present it in the form of a written business evaluation document. This service is particularly valuable when the investor has two or more practices which they are considering for purchase.
Legalities
There are numerous legal issues involved with transferring the ownership of a business, and a legal expert, or the legal department of an expert accountancy industry broker will be able to guide purchasers through the legal maze. As well as the basic contract of purchase, the lawyers will also draw up agreements to protect the confidentiality of both buyer and seller until the job is done, agreements about non-disclosure and contracts to protect the original owner from setting up another practice and poaching all of his clients back. We will not allow a deal to progress to the next stage until all the relevant legal paperwork has been completed, signed and returned for checking.
Timetable
Buying a practice can be a lengthy process, and a we come into our own when it comes to managing the timetable and keeping the deal on track. We will have a case manager assigned to each deal, meaning that both the buyer and the seller have one point of contact to discuss the deal. Using us can also mean that the deal is kept confidential longer, as dealing through a third party lessens the possibility of staff, clients or the press hearing about a deal before all parties involved are ready to go public.
Cost
Novice investors may feel that using a broker to facilitate their accountancy industry purchase is an unnecessary expense, and they can do the job just as well by themselves. Many investors underestimate both the time and the effort required to pull together all of the information required for a business purchase, which can be so time consuming that it is a job in itself. The commission which the broker charges is expressed as a percentage of the purchase price of the business, and represents excellent value for money when the range of services offered by a professional business broker are taken into consideration. Fees can vary according to the business sector as some industries present more complex issues than others. Contact us to discuss our costs in more detail. These can be allocated to either the buyer or seller, based on your request.
Choosing a broker
We believe that we offer one of the best services around in the accountancy practice sales market. Before you speak with any one else contact us for a no obligation discussion so we can personally highlight the service levels that we offer: Alternatively if you are looking to buy a practice then fill in the form below and one of our consultants will contact you to discuss in more detail.
