Do you sell or merge an Accountancy Practice?
View our current accountancy practices listed for sale
There are a whole host of reasons why a practice owner may decide that the time has come to hang up the calculator and double entry ledgers and sever his/her ties with the accountancy industry. Most often, it is a change in personal circumstances such as retirement, relocation to another part of the country or a reassessment of priorities after a major life event such as the birth of a grand child or life event which hastens the decision to put the accountancy practice on the market and move on to the next challenge. Although in many ways selling an accountancy practice is similar to selling any other business, there are several other steps to the process which have to be carefully navigated.
Going it Alone, or Selling through a Broker?
Sole traders or partnerships may be reluctant to get a broker in to manage the sale of their business, feeling it is an unnecessary expense. There have been many successful sales of a practice managed by their owners, and it is certainly possible for the transaction to be completed in this way. However, there are several major advantages to using a broker to conduct the sale for you.
- Impartiality. Many owners of small practices have invested not only money, but also blood, sweat and tears into building their practices up over several decades. They will have an understandable emotional attachment to the business, the staff and the clients and it is very difficult to take a step backwards and evaluate the business from a neutral standpoint is almost impossible. A member of staff at a specialist broker’s will have no emotional attachment to the business and will be able to be completely objective.
- Anonymity. One of the major concerns of an owner who is selling up their practice is that trade will be adversely affected as soon as clients realise that the practice is on the market and fear that they will start to go elsewhere. When selling a business privately it is almost impossible to keep the sale from public knowledge or staff. It just takes one overheard conversation, unusual series of visits or displaced email to start the rumour mill turning in your office. It is not practical to run your business and manage the sale at the same time. Using a broker who is an expert in the accountancy industry bypasses this problem completely.
- Expertise. Even the best qualified and most experienced accountancy practice owner cannot be expected to be an expert in negotiating the sale of a business. These skills take time to learn, and using a broker ensures the smooth handling of the sale and the best price being achieved. This is likely to be your first and only sale. Don't make mistakes on your won as this could lead to on going legal disputes with the purchaser that could run for years and cost plenty of money and emotional involvement. Brokers are experienced and can help avoid these.
- Time. Many small business owners underestimate the time and effort which is involved in selling their business, from putting together the original advertising material, dealing with lawyers, talking to prospective buyers and organising for the business to the valued all at the same time as the day to day business which has to be completed. For many small business owners, there are simply not enough hours in the day to manage the sales process effectively.
Selling Process
Once all of the above factors have been considered, most businesses in the accountancy industry take the decision to contact a broker to help them with the sales process. Fortunately by reading this guide you are at the door of one of the most experienced and dedicated accountancy practice brokers. This is how we can help you progress through the next steps:
- Initial Meeting. The first step in the sales process is to contact us by email or telephone, and set up a meeting between you (the owners of the accountancy business) and one of our accountancy practice consultants. This meeting can take place either within the business being sold, or at our offices, whichever option is more suitable for you. This meeting should be viewed as a “get to know you” session, where a relationship can be formed between us and we can really get to grips with your practice, its management and its client base. These sorts of meetings will take at least 2 to 3 hours to complete.
- Confidentiality Agreement. At the same time as the first meeting, both parties will sign a confidentiality agreement. This is a legally binding document which will protect the anonymity of the business and will also guard against information being disclosed by either party. The deal should not be advanced until this document is signed and agreed by both the seller and the broker.
- Contract. After the meeting, we will take a few days to consider which of the many sales strategies at our disposal is the best option for marketing your practice. A proposal will be drafted and forwarded to you for your comments, and once we have both agreed on which strategy is to be pursued, the contract will be signed and the marketing of the business will begin. At this stage, the discussion about the broker’s fee will also take place. Commission is normally expressed as a percentage of the final agreed selling price, and the contract should be clear regarding what is and what is not included in the fee being charged. Contracts are of course legally binding, and should not be signed until you are happy about their responsibilities and obligations. It is common for us to agree to transfer our commission to the buyer of your practice so you the vendor pay us nothing for working with you.
- Marketing. Once the contract is signed, the process of finding a buyer for the business starts. We have a database of hundreds of people and businesses who are interested in this industry, and in these cases a buyer may be found without the practice ever having to be actively marketed. In other cases, the business will need to be marketing actively by placing the details on our top ranking website, in trade publications and in other accountancy specific literature. We will manage the responses from the advertising, and will help to weed out the serious buyers from the time wasters. We will also verify that buyers have funds ready before moving onto the next stage of the process.
- Short Listing. An ideal scenario would be for the seller to have several interested parties and several options for selling the business. This is our gold standard and when this occurs, we will arrange meetings between the parties, all the time maintaining confidentiality. You will then be able to select two or three buyers who you feel are the best options as purchasers.
- Due Diligence. The potential purchasers who have been short listed will then carry out a process known as due diligence, where they go through the books of the business with a fine tooth comb and spend time investigating issues such as staff, wages, goodwill, repeat business and future growth projections. Once the due diligence process is completed, the purchaser will have a clear idea of the value of the business.
- Offer. Once all interested parties have completed their investigations and then arrived at what they feel is the value of the practice, we will invite them to make an offer. These offers will then be passed to you for careful consideration.
- Acceptance and Legal. The practice owner will choose what he/she considers to be the best offer for his/her practice. This may not necessarily be the offer with the most money on the table, as other factors such as the speed with which the deal can be concluded and possible claw back issues are also important considerations for many sellers. The deal then passes into the hands of the lawyers, who deal with the paperwork and exchange of contracts which is required for the deal to be concluded legally and correctly.
- Resolution of Difficulties. Most purchases run smoothly and without any complications, but if any issues arise between the acceptance of an offer and the completion of the deal, we are always here to act as a neutral third party to resolve any disputes and disagreements between buyer and seller.
Getting back to the main question we asked at the top of this page. "To sell or merge" your practice. To give you a more accurate idea please give us a call as there are so many factors that need to be considered and we will need to find out more about you and your practice to accurately guide you on this issue. We are here to help, so discuss your situation with us free of charge today. There is no obligation to use us following this initial discussion.
