; analytics

One Partner Firms - What Are My Options?

The very short answer is that there are numerous options to sell and/or exit. Let's dive in...

1. Internal Succession

This is a great option on paper as the internal sale is to a known person, who is familiar with the clients and the rest of the team, and presumably a strong cultural fit. In reality this can be challenging because of what DMY calls "the Three C's". Not only do they need to have the right capability, they also need the capacity (financial) and the confidence to transition from employee to business owner. If they fail any one of the Three C's it won't work, and this is often the case. That is why many of the firms who approach us, have already considered and then passed on, an internal succession.

2. External Sale and "traditional" Exit

In this scenario, the Owner is ready to retire. He/she sells to a purchaser, transitions for a period of c. 12 months - full time or part time - and then exits. Nice and straightforward.

3. External Sale and extended Exit

Here the Partner is looking to sell their practice but wants to continue working. We find this is quite common. Sometimes it can be because they want to realise the capital value of their practice now, or they want to spend less time managing the business and more time doing what they enjoy best - servicing a key portfolio of clients. Accounting owners wanting to set themselves up as Virtual CFO's post sale is another path we are starting to see more of.

We find this scenario to be reasonably common, and many buyers are open to it. They like the fact that the owner wants to stick around for an extended period because it helps with the retention of clients.

4. Merge / External Sale for Equity

In this scenario the partner is looking to find a like-minded firm to join forces with, continue working and retain equity in the joint practice. Growth is obviously a key driver of this, but so can the desire to no longer "do it alone" and have a peer to share the workload and bring a broader set of capabilities and experiences to clients.

These are again common although result in more complex deals as obviously the value of both firms needs to be agreed. Strong cultural fit is, of course, a must, as is a well constructed Shareholder Agreement.

So, in closing, there is always more than one option. Our advice  is to be clear on your "why" ie what is your motivation and what does success look like for you. This will help guide you down the path of choosing the right option. At DMY we have many conversations with owners weighing up their options and can provide a valuable independent perspective. If that sounds like you feel free to reach out to mark@dmyassoc.com.au or daniel@dmyassoc.com.au for a confidential discussion.