Buying blocks of fees

Buying blocks of fees

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I am looking to purchase a block of practice fees, are there any rules of thumb that can be used as a basis of valuation? 

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By LuKosro
18th Oct 2014 17:35

Between 0.5x and 1.2x of Gross Recurring Fees depending on:

* Distressed / Non-distressed sale

* Level of due diligence allowed by the seller (a very detailed monthly aged debtors report for the previous year to start)

* Guarantees offered by the seller (all clients and top 10 clients)

* Experience / Qualification of the practice partners

* Percentage of significant customers (If they make a disproportionate percentage of the fees)

* Sale with / without employees

* Timing of payments / tranches (ex. 40% now, 30% in 9 months, 30% in 16 months)

* Willingness of the seller to smooth the transition (discuss with clients)

* Ongoing commitments / work in progress for current customers

* Existing goodwill / reputation / marketing investment in the practice

* Many other issues that I might have missed.

Hope it helps!

 

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Jennifer Adams
By Jennifer Adams
20th Oct 2014 11:56

Article on the subject here - incl due diligence questions...

... 'How to Navigate the Broker process'

https://www.accountingweb.co.uk/article/how-get-broker-process-right/544815

 - as the article states its not a straightforward exercise. I dont want to put you off but as you can see by the 'opportunities' Section of this site there are many buyers but hardly any sellers.

also have a look at the website of Draper Hinks - there are articles there and a list of what you should ask as 'due diligence'

http://www.draperhinks.co.uk

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