Whether you’re looking to sell your accounting practice because you want to retire early or make your dream of travelling the world come true, an orderly sale will require extensive planning and preparation. The central question to answer is how to ensure you get the best price for your business in a competitive market.
Here are the factors to consider when planning the exit strategy for your accounting firm:
- A smaller scale practice typically means an easier sale
Larger accounting firms find smaller practices more appealing as there are fewer complications during the transition: less staff to deal with and a cheaper price tag with a ready list of clients. Unlike the complexities of selling a larger firm with different partners, there are fewer challenges when selling small practices with a sole owner.
- Why client retention matters?
For the buyer, the value of a potential acquisition is dependent on one critical desirable – the quantity and quality of clients that are on the books. But as the seller, you will have to make sure that client loyalty continues even after the practice is sold. This is because it is typical for the buyer to offer to pay in yearly instalments than an upfront sale and the payments are adjusted based on the number of clients who withdraw after the handover.
- Time the sale before the expected profitable period
The timing of selling your practice can be a further inducement to a potential buyer. If you have clients in seasonal industries or you know when your busy cash flow cycles are, you can use this as an added incentive as buyers find quicker returns on their investments harder to resist.
- Can you sell internally?
Internal succession ensures that your ‘legacy’ or the vision you had when starting the business lives on after you. Selling to another business means your practice as you know it comes to an end. Internal succession is made easier in larger firms where one partner can sell to another.
- Could you merge with another firm or add in a partner?
An alternative solution to selling your firm is to partner with a like-minded business. Combining resources, intelligence and capital could give both firms the best opportunity to succeed. If you’re not willing to merge, you could look to bring in capital by adding another partner, who could also provide crucial knowledge, skills and contacts that will help your firm grow significantly.
Need further advice and guidance? Get in touch with us at DMY & Associates to discuss business exit strategies for accounting firms. We have unmatched expertise in mergers and acquisitions, outsourcing and capital investments. Want to sell successfully with minimal frustration? No matter your goal, we are on hand to help you achieve them. Give us a call today.
Related Tag: Business Exit Strategies for Accounting Firms