Selling your business can often be exciting but also quite daunting. Just because you have the skills to run the business on a day to day basis, it doesn’t necessarily mean you naturally have the skills to negotiate the best sale price. There may be many reasons as to why you have decided to sell your accountancy practice and navigating the sales process can sometimes be rather complicated. In this article, sell accounting practice, we look at the process involved.
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For a free initial discussion on how we can help you to negotiate the sale of your accounting practice, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help prevent you making mistakes, saving you money and time and also avoiding the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
What Are The Key Things To Consider?
Selling an Accountancy practice is more complicated than using a multiplier to arrive at a value. Any incoming potential purchaser will analyse all aspects of your business above and beyond your balance sheet and profit and loss. Scalability of the business, staffing issues, wider economic concerns, and technical considerations will all play a part.
There are various things to consider when looking to sell and these can include:
- If your practice is relatively small, it will be easier to sell. Much in the same way as selling an expensive house, it may well tick all the right boxes for a potential purchaser but the more expensive it is, the fewer people will be able to afford it.
- Client retention is one of the key metrics in deciding the value of an accounting practice, with buyers trying to avoid paying large sums at the beginning in case clients leave when you sell up. In many instances, the purchase price will be staggered over a period of time with the sum payable being dependent upon client retention numbers. The key to this whole process is to try and make yourself dispensable when you are preparing your business for sale. Ie. ensure the firm is not wholly dependent upon you to bring in and retain new clients. Try and ensure that loyalty continues after you’ve left. Make sure your clients have confidence in your staff.
- Selling the business to someone internally could be an option. In larger firms, partners can sell their equity to the remaining owners or. Succession is built into the business plan. In small firms, this may be more problematic but it is definitely worth investigating.
What to consider when involved in negotiations?
Price is not everything: Clearly getting the maximum price for your practice is hugely desirable so that it allows you to fulfil your dreams and ambitions. However, the terms of the fee agreed is hugely important and should not be overlooked. How is the payout to be structured? Will all the money be paid upfront or a portion deferred dependent upon performance? What are the implications of the sale to the existing staff and management? All these issues need careful consideration.
Be clear on your bottom line: You need to mentally set your bottom line figure for which you are prepared to sell your business for. This must be realistic so do your research and due diligence to see what other similar practices have sold for (if appropriate). Be prepared to walk away if your bottom line is not met. Getting to this number takes research, personal reflection and preparation. Sticking to it can ensure that you end up comfortable with the final deal.
Be clear on what you are prepared to concede: When you start negotiations, you don’t want to show your full hand. If there is very little room for movement in the price, there may be other things you will be prepared to include as part of the sale. Make sure you have a solid plan of what you are willing to negotiate on and stick to it.
Know whom your negotiating with: To get the other party to agree to a deal, a business owner needs to be intimately familiar with the buyer’s true interests. Try and establish whether you are dealing with an experienced business owner or a fresh-faced entrepreneur. Is the buyer an individual or do they represent a larger organisation, and finally, what are the buyer’s motivations.
Carry out thorough research on your own business: You should always have an appreciation of the buyer’s perspective before starting negotiations. Be clear on your business assets and their value, relevant market activity and industry comparable sales. The more you know about your own business, the less likely you are to be taken advantage of.
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Should you make the first offer? It is often considered wise to wait for the other person to show their hand in any negotiation.. However, there may be an advantage in making the first offer as this price can act as a baseline around which negotiations can take place. This strategy is most useful when the seller has an information advantage over the buyer. If the seller is not in that position, playing coy might be the ideal strategy to avoid going in too low.
Keep Calm: As Vito Corleone famously said in The Godfather “Never let anyone outside the family know what you’re thinking”. Keep your cards close to your chest but remain calm and polite throughout the negotiation process. It can be lengthy and sometimes you may feel the buyer is being obstructive. Remain professional at all times and do not be afraid to walk away from the deal. There will always be another buyer.
How we can help
We have a proven track-record of helping clients sell their accountancy practice no matter the size. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner and support and advise you with all the negotiations. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Corporate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form . We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
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