accountancy practices for sale

The Accountancy Practices Sales Process: A buyers and sellers guide.

View our list of accountancy practices for sale

Selling your accountancy practice is both an exciting and stressful time during your life. It is difficult to continue to maintain the high levels of client satisfaction manage your business and engage in the sales and negotiation process all at the same time.

Are you thinking of selling or buying an accountancy practice? Have you asked "how do i sell my accountancy practice or how do i value my accountancy practice"? Have you got plans to expand the amount of work that your practice performs? Have you considered buying a block of fees from a neighbouring practice? Have you asked yourself, how have do I expand my practice into other areas? And at the end of the process how do you realise the monetary value of your practice that may have taken you your entire career to build up?

These and many other questions are commonly asked by our clients and they are relevant questions to consider when expanding a practice or when you are executing an exit strategy.

To give you an idea of the answers to some of the above questions we firstly need to highlight the kinds of services that we offer to the accountancy industry and also provide some concise FAQ’s about the whole buying and selling process.

Firstly, what kinds of services do you offer the accountancy industry?

We are an established company and operate in various niche markets including the accounting industry. One of our leading areas is the accountancy practice sales and brokerage market. We have a fantastic reputation for offering a personalised and ethical solution to each buyer/vendor in the accountancy field. Some of our services are listed below

Accountancy practice valuations
Full market appraisal and discussion of available buying/selling options and time scales
Targeted marketing to bring your practice to the market and to those who are interested in buying it
We screen all enquiries to make sure that only suitable and ready purchasers and introduced to any vendor
We introduce only suitable screened buyers to the vendors whilst maintaining the strictest of confidentiality to both parties
We receive all offers and pass these onto the vendor and give advice how to proceed in the marketing/vetting and sales process
We liaise with both parties during the negotiation process
We can introduce as requested both parties to a long list of potential legal representatives whom we have worked with in the past and can advise on an appropriate fee structures for you to agree
We liaise with both parties during the sales process to facilitate as smooth and stress free transition as is possible
We operate only on a no sale no fee principle.

It’s also quite simple. Due to our marketing strategy if you have found this information and are reading it then so are hundreds of potential purchasers. We do all the hard work finding a suitable buyer leaving you to concentrate on what you do you best! “Running a successful and profitable accountancy practice”.

Why would I want to sell my accountancy practice?

There are numerous reasons why you might want to sell your accountancy practice. It may be that you are retiring or simply want to realise the benefits of all your hard work. It may be that you have been working towards this goal for some years and that now is the best time to sell.

How do I keep the sale of my accountancy practice discrete?

We fully understand the nature of buying and selling businesses. It’s what we do! It is important to maintain the anonymous nature of your accountancy practice sale during the whole process. You may have many members of staff whom you don’t want to be aware that the business is for sale. You may not want local competitors to be aware also.
When we advertise and market your business we make sure that all documents contain no information that could identify you. Your business will be advertised in the accountancy press, on line and using other methods. We will not give out your name, location or brand. As we filter and screen potential buyers we will only ever pass serious buyers onto you so that we maintain the anonymous nature of this process.

How do I value my accountancy practice?

As with any other type of business there are many types of valuation methods and ultimately the value of your business will be the price that someone is willing to pay for it. The commonly used method in this industry is a multiple of 1 to 1.5 of your annual recurring income. Profitability and future potential revenue streams are also important factors when valuing your accountancy practice.

With any market the value of a product is dictated by the prevailing market conditions and ultimately is what a buyer is prepared to pay for the product. Only one buyer is required however so in circumstances where there are two or more interested parties the price that one of the buyers is prepared to pay increases. Competition is healthy and we find that the most attractive practices sell for more than is sometimes the marketed value. There are however some typical market rules in this sector particularly for small practices. These practices with turnover over of around £250,000 the normal market rate is in the region of 1 to 1.5 of the annual turnover or fees.

What is the accountancy practice sales market like at the moment?

There are normal seasonal variations across the year but due to the sales process we have sales going through at all times of the year. The market is currently buoyant and accountancy firms are always looking to expand their market share. We have a database of registered buyers/accountancy firms with their exact requirements. We actively seek to pair up those new practices that come to the market with our registered buyers. We always however encourage new practices to be fully marketed on our website so that the correct market value is achieved. In the past this has been above the practice valuation point particularly when there are two or more interested parties in your practice.

What happens in the normal accountancy practice sales process?

You decide to implement your exit strategy from your business and engage in the sales process
You decide on either a direct sales process driven by you or to use the services of an accountancy practice broker
If you decide on the use of an experienced accountancy practice broker then you are guided through the remaining steps
You sign a letter of engagement with a practice broker. This legally commissions the use of the broker to act on your behalf during the sales process
You are visited so that we can look at your practice, value the business and ascertain all the required information that the buyer will want in order to purchase your accountancy practice
The broker works with you to produce all the documents required to successfully market and sell your practice. This will involve the preparation of a sales brochure and information pack about the strengths of your business. A full set of financial accounting data is also prepared however this is only passed onto fully screened buyers who are still interested in purchasing your practice after reviewing the marketing material.
You will review, make suggested alterations and agree to the marketing material on your practice
We market your practice and distribute to our database of already registered buyers
All buyers are fully screened and have signed a confidentiality agreement with us. We deal with day to day enquiries for information about your practice and screen for serious buyers with whom we subsequently introduce to you
When a buyer after reviewing the marketing and financial data wishes to visit your practice to look around we will make an appointment for them to visit you at a convenient time. This is to maintain the confidential nature of the sales process and not to disrupt the normal day to day workings of your business.
Offers to purchase the practice are made through us
We pass on these offers to you and help with the negotiation process based on our appraisal of the interest to date from the market about your practice. On some occasions we will proceed to sealed bids if there is more than one acceptable offer from more than one party.
A letter of acceptance subject to contract is sent to the buyer
The buyer makes a deposit to us to secure the removal of your practice from the market
The buyers legal representatives submit a heads of terms agreement which is agreed upon by both parties
The due diligence process occurs. We co-ordinate between both sets of accountants and legal representatives to facilitate this process and help the deal to progress as smoothly as possible
On satisfactory conclusion of the due diligence process a sale and purchase agreement is produced by the buyers legal representative. Once you are happy with this agreement both parties sign. Contracts are exchanged and the deal is completed
The agreed transaction value from the sale of your practice is wired to your account or solicitors account
The sales process is completed and it is time for you to enjoy the rewards for your hard work and plan the next steps in your life/career

Can I choose not to use a broker?

Yes. A significant percentage of practices are sold directly without the use of a broker.
As the sales and legal process is both time consuming and stressful a substantial percentage of those who complete the sale of their practice individually have some regrets about this decision.

Will I be expected to work in the practice after the sales process?

This depends on the type of deal that is negotiated. In all deals there is a tie in period which is normally between 1 and 2 months. During this hand over period you will need to work with the new owners to facilitate the hand over of the practice and clients. You may decide that you want to stay on in some other capacity such as a partner or silent investor. This naturally is your choice and depends on the underlying reasons for the sale.

Are brokers worth the commission fee?

We only get a fee on the successful completion of a practice sale. It is in our interest to get the maximum value for your practice in the market. It is believed that by using a broker approximately 10% higher market values are achieved than through the direct sales route. We also don’t charge you any up front brokerage fee. We only get paid by the results of our work. Because our fees are linked to a percentage of the sale then we also strive to get you the full market value at all times.

How long does it take to sell?

This depends on the type of practice, practice location, number of clients and the market demand. On average the process takes between 4-6 months from the day of marketing to complete however some practices have sold before this time frame

How do you differ from other accountancy practice brokers?

There are many different brokers in the market however we value our individual approach to each practice sale. Here are some other key fundamentals to the service that we provide:

Free seller registration
Free buyer registration
Great website marketing exposure using state of the art techniques to get your practice to the greatest number of possible buyers in order to find you the right buyer at the right price
No marketing costs or journal advertising costs to you when we market your practice
No payment/fees to us unless your practice is sold

No lengthy tie in period to use us as sole agents. If you are not happy with us we don’t prevent you from achieving your goal of selling your practice.
Full guidance during the sales process as outlined above. We offer a full brokerage service to you

When can I expect full payment for the sale of my practice?

This depends on the position of the vendor and buyer. Most vendors are interested in a complete up front sale with 100% of the fees payable on completion. This gives them the advantage of a clean break and full monetary receipt. Some buyers are interested in an earn out or deferred consideration where a % of the agreed value is paid on completion followed by another % payment after 12 months and or 24 months. This gives a lower risk approach and makes financing the deal much easier. The additional benefit is that profits from the practice can be used to fund the remaining acquisition giving obvious tax advantages. In this market, accountancy practice sales or block off fees purchases are normally an outright purchase via a full capital payment. We do not encourage vendors to agree to an earn out process. Ultimately the decision is yours and for you to negotiate. We of course are there the help advise and inform based on our previous experience in the accountancy sales market.

What are warranties?

During the negotiation of the sale and purchase agreement the buyer will ask for you to agree some warranties about the business. The number of warranties and what they are there to protect depends on the type of practice and what the due diligence process has unveiled. It is normal for the buyer to want to seek some protection over issues and events that they had no control over prior to the sale. This may be relating to you promising that you have correctly dealt with VAT, HMRC, PAYE and any outstanding claims or legal issues relating to events prior to the sale. If after the sale process there is a claim for outstanding fees/taxes then the buyer could pass this claim onto you. This would be referred to as a claw back. There is however some room for manoeuvre so if there are any outstanding issues you can disclose this to the buyer during the negotiation process. If they proceed with the deal having full knowledge of any issues then they proceed at their own risk and any mitigation from the disclosed item will stay with them.

I own the freehold to my practice premises. Can this be sold with the accountancy practice?

As your broker and a specialist in this field we can act on your behalf to sell the freehold or leasehold to your premises. We can advise you as to all the options if this is the case.

The buyer will have the option during the negotiation process to consider what he/she wants to do about the current premises. If it is leasehold then it may be easier to take on the lease. If it is freehold then this could be offered as a leasehold of sold as a freehold property to the buyer.

What is PI Insurance?

PI insurance is an industry requirement and has been for many years. This is legal cover that you will require in case a current or previous customer brings legal action against the practice (ant the new owner). You will need to ensure that this cover is in place before the sales process is completed.

Can the vendor retain clients?

Normally if you are selling a block of fees or the entire practice it would not be good for the buyer for you to entice those customers away after the sales process. There are normally warranties that you will need to agree to that this will not occur and there may also be a geographical restriction to you setting up another practice. If the vendor wishes to retain clients then this will reduce the attractiveness of the sale to the buyer and may add additional risk to them when considering to proceed. The process however is open for negotiation. Once again we could advise you.

How long is the handover period?

This can vary from a few weeks to a couple of months. It’s purpose is to ensure a smooth transition in ownership.

What happens to any work in progress?

Current clients will proceed be handed over to the new owners however fees for any work in progress will be passed back to the vendor. Typically this can be in the region of 70-80% depending on the amount of work that has been carried out..

What are claw backs?

This is where the purchaser can make a claim to retrieve some of the purchase price and normally has an agreed time period to it. Typically this is for a breach of warranty however this is most uncommon.

How can I get finance to help purchase a practice?

We can introduce buyers to financial advisors who we have worked with previously. They will be able to advise you as to the financing options available to you.

How do I get a knowledgeable solicitor for the sales process?

It is best to instruct a solicitor who works regularly in the accountancy market. We have customers who have used a variety of legal representatives and can pass on this information to you so you can make an informed choice.

I want you to sell my accountancy practice. What do I do next?

Please contact us so one of our members of staff can be allocated to deal with you and advise you on the above process. A list of our accountancy practices for sale can be seen on this link