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Get Yourself Sale Ready

Practice owners looking to sell often ask: What do I need to do to get ready for sale? In this article we share our top tips to get yourself ready for a successful sale.

 Understand Your "Why"

The starting point is always: what is your “why”? ie why do you want to sell, and what are you going to be doing next with your life? For many owners selling is a logical culmination of a lifetime’s work building their practice: they have reached an age where they are ready to wind down and enjoy the fruits of their labours.

For some owners it can be more complicated. Health reasons can be a factor, either for them or a family member. For others it may be that they have achieved what they set out to do and are ready to take on a new challenge. We have seen this with practice owners in their fifties, their forties, and even their thirties.

It is also common to see practice owners who regard the sale and exit from their practice as two quite distinct events. Typically they enjoy working with clients but, as their practice has grown, have found they spend too much time on the operational side of the business and less time with clients. For these owners, a sale is a way to take advantage of a purchaser’s back office to free themselves up so they can spend more time doing what they enjoy while someone else takes case of all the operational “stuff”.

Be Clear What Success Looks Like 

There are a number of elements to a successful sale. These obviously include the commercial outcome – the sale price; retention terms; the lease (particularly if the premises are owned by the Vendor); fixed assets; and work in progress – but also

  • How the clients are looked after
  • What happens to the team
  • The Vendor’s time, role and remuneration in transition
  • The length of time to sell

We always encourage would-be sellers to think through what is most important to them and visualise what a highly successful outcome looks like. It’s much easier to achieve if you are clear what it looks like!

 Free Your Mind

It is vital to go into a sale process with a clear head. Most practice owners haven’t done it before and it is a step in to the unknown. Selling your practice can often go smoothly, but it can also be stressful and an emotional rollercoaster.

Meeting with potential buyers, evaluating who will be the best fit, negotiating the commercial terms, and finalising contracts of sale are all important elements of the sale process that require clear thinking. A good broker will support their client through all of these steps but the buck still stops with the seller. If there are a lot of other things going on in your life, is now the best time to be selling?

 Research The Market

If you were selling your home, or car, no doubt you would undertake research to see what the market was doing. Selling your accounting practice is no different. Whenever we meet with would-be sellers we encourage them to ask lots of questions:

  • How many buyers are out there?
  • What are firms selling for?
  • How long will it take? etc

At DMY we have lots of market data at our finger tips and are happy to share this with practice owners. The better a would-be seller understands the market for buying and selling, the better they will be prepared to “enjoy” (!) the process and achieve a successful outcome.

A final point on researching the market. If you are using a broker, make sure they truely understand the accounting market, and that they are appropriately licensed (individual and corporate) in the State or Territory where you are based.

 Understand The Sales Process

Beyond researching the market, you don’t want to embark on a sales process without a clear understanding of what it actually looks like. A number of times we have spoken to would-be sellers trying to sell direct but the deal has fallen over because neither seller nor  buyer were clear on the process and were working it out as they went. This caused confusion, stress and conflict and was a major factor to the deal not proceeding.

At DMY we have designed a very clear and logical process from start to finish and ensure our clients are well educated in this before they start. Customised tools and templates are used at every stage to make the process simple to follow and less painful for the seller and the buyer. If you haven’t sold before the process may feel daunting, but it doesn’t need to be. Have a good process and stick to it.

 

 Housekeeping 

If a practice owner approaches us ready to sell and asks what they should do to get their practice ready, we generally answer: “housekeeping”. Tidy up any elements such as work in progress and debtors that may be painting an unfavourable picture of the practice’s operating efficiency, and ensure your client files are in good shape as they will be reviewed by the purchaser at some point during due diligence.

Other than that, if the practice owner is at a point where they are ready to sell, we generally say don’t try and do too much else. Assuming there is nothing fundamentally flawed it is better to stay focused on servicing clients and maintaining the performance of the practice than get distracted “fixing” something that the purchaser may not even value.

 The Wrap

In summary, most of the elements involved in getting your practice sale-ready involve you, the owner rather than your practice: Be clear on why you are selling and what success looks like; understand the market and what a good sales process looks like; and approach it all with an uncluttered mind ready to think clearly and make those all important decisions.

As a final point we often get asked by would-be sellers how long it will take to sell their practice.  And we always answer: "It all depends..." While every sale is unique there are some common scenarios when it comes to timing, which are the subject of a whole separate article we have written. To access click here: How Long to Sell My Practice?

To discuss this article in more detail and what it may mean for your situation, contract on of 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