Do I Have To Sell All Of My Clients?

Published November2024

This is a question we occasionally get asked when first meeting prospective sellers. It's a good question.  And the answer is...it depends.

Here are three scenarios that we see and our recommended way of dealing with them:

1. The practice owner wants to retain a small group of family and friends. This is rarely an issue with the buyer. (regional)

• This is rarely an issue with the buyer and is easily resolved by having the relevant clients listed as a Schedule in the Contract of Sale. 

2. The practice owner wants to retain a decent cohort of clients (eg $100,000+ in fees) to maintain an income in retirement and/or because these are their oldest and closest client relationships.

• Generally the right buyers are ok with this, subject to the size of the overall fees being sold.
• However, they would not expect the Vendor to be maintaining a website or taking on any new clients and this would likely be reflected in the binding sale documents.
• Buyers would also encourage the practice owner to service these clients within the Purchaser's practice or, at least, have a first right of refusal, when the Vendor comes to sell them.
• DMY have sold practices in such a scenario and can provide prospective sellers with the advice and insights they need to weigh up this course of action.

3. The practice owner wants to sell a sizable percentage of their clients (eg 10%-30% of the fees) to either "downsize" or shed less profitable clients, but maintain the rest and continue trading.

• This is the scenario that we typically see as most problematic.
• Buyers will be wary because the Vendor is still trading and they may be hesitant to take on clients that are considered of lesser quality or who may feel they have been pushed out the door.
• DMY have been approached to sell parcels of fees under such a scenario but have declined in the past as we see these as being problematic to navigate.

 
To discuss these findings in more detail and what they mean specifically for your situation, contact DMY’s Directors below.

Mark Emney

Mobile: 0434 079 530
Email: mark@dmyassoc.com.au

Daniel Jones

Mobile: 0401 493 773
Email: daniel@dmyassoc.com.au