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Alternatives to selling practice

Don't want to sell up quite yet. What else can I do?

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Anonymous for obvious reasons.

I have a practice in a high-demand area that's profitable but I'm getting older. I don't want to sell my practice to some shark who'll have their pick of my best clients and drive away the weaker ones, so that I'll end up getting a pittance for what I've built up over the years.

Is there a case for bringing in a younger partner to gradually take over most of the business while keeping me on for 3-4 years? Or maybe this is just me being hopeful.

If so, how would I go about finding the ideal person? They'd be an accountant with practising certificate but without an existing practice behind them.

What options (other than selling to a shark) would I have?

Has anyone heard a similar story of exiting in a graceful way?

Replies (15)

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By cbp99
29th Jul 2019 15:05

You seem to assume that all buyers are sharks. Of course you need to be careful but if you are not in a rush to sell, you have plenty of time to research potential buyers.

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By cbp99
29th Jul 2019 15:08

You seem to assume that all buyers are sharks. Of course you need to be careful but if you are not in a rush to sell, you have plenty of time to research potential buyers.

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Replying to cbp99:
Hallerud at Easter
By DJKL
29th Jul 2019 15:33

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By SouthCoastAcc
29th Jul 2019 15:34

A local firm near me has only paid on average 2/3 of the agreed price due to clawbacks!

That is over multiple acquisitions.

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By James Green
29th Jul 2019 16:07

What about merging with another firm and easing out.

We did a deal where the practitioner worked 5 days for the first year, then 4, 3, 2 and 1 in the final year but continued to earn the same profits across the five years as they did in year one.

We got a very smooth handover and retained 97% of the clients. He got a gradual wind down and took home more cash than he would have done on a hard sell.

The worst retention deals we do are very hard sells such as following the death of a Practioner. In these cases, the retention has been around 25%

Thanks (3)
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By atleastisoundknowledgable...
29th Jul 2019 17:19

Where are you based? What is your client type?

If you’re in/near Manchester, or locality isn’t important to your clients, send me a DM.

Thanks

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By Ken Howard
30th Jul 2019 06:41

If you're on your own (no accounting staff), then just continue operating on your own for a couple of years longer and you get your 1.25% GDP (income less overeheads) so anything you get after that is a bonus - you could sell at 0.5% for just files only with no roll-on and no clawback.

I went through the thought process as I'm close to retiring. Unless you have staff (i.e. so profits are a lot lower), it's better just to work longer yourself so you keep most of your own GDP (assuming overheads are minimal).

If you're thinking of a long handover (1-3 years), then it makes sense just to keep it all yourself and take all the profits, then just cut and run with a cheap sale or even a giveaway for a nominal sum, just to move it all on without having to deal with transfer information to lots of different accountants upon a hard close.

Thanks (2)
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By Slim
30th Jul 2019 15:21

I’ve seen small sales with no claw backs, money up front etc. Apparently there is big demand for small batches of fees.

Maybe something to look into? You can gradually reduce the numbers.

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By LostinSuspense
31st Jul 2019 10:53

If you merge with another practice, have you considered a longer ease down time but focused more on client management than actual accounting work? You might get a new younger partner focussed on growth but lacking the skills to properly consolidate their business for longer term success. I worked for a long established practice where the senior partner (well into his 70's) only came in to meet important clients and left the mundane day-to-day work to younger colleagues.

With the best will in the world and the most conscientious staff, when you 'sell up' there is always the risk that there is a personality clash or that your clients choose you because they like and trust you and prize that more than reduced fees?

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By xanatinker
06th Aug 2019 10:19

Hi,

This is exactly the kind of thing I'd be looking at as a prospective buyer. I think it would be important for the seller to stay working for the company for a while after in order to help client retention.

You have spent years I'm sure building your business and would want to keep all of your clients happy even after you've left.

If you are in Northern Ireland send me a direct message.

Another option would be to contact the Retiring Accountant. If you look online you will find their website. They are a very good mergers and acquisition company focusing on accountancy practices. They genuinely seem to want to put the business first and try to match buyers and sellers on best fit as opposed to the quickest sale. They want businesses to succeed and continue after sale.

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By pauljohnston
06th Aug 2019 10:30

Our most recent acquistion is on going. The outgoing practioner and I work hard to see all clients and to make them feel that the process is seemless.
Be aware that if it is a larger firm many of your clients wont like not getting the personal touch.

In this case the practice is of simalar size and we generally have the same ideas as to looking after clients.

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By Accounting_HUB
06th Aug 2019 13:23

Consider becoming part of an accounting hub!

A partnering solution - working in collaboration with other like minded firms that have a vested interest in managing and maintaining your client and operating base over a defined exit period.

It’s difficult to go in to too much detail here about the mechanics but some of the key benefits are:

1. Over the term, upwards of 1.5 x GRF.

2. A phased exit, transition that is aligned to your specific needs and timescale.

3. An arrangement that is all about building on the success of your Firm with client retention and development at the core.

If you’d like to understand how the HUB works, DM me anytime.

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Replying to Accounting_HUB:
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By xanatinker
06th Aug 2019 15:03

Hi,

This is something I'd be interested in. Can you let me know how the HUB works?

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By Eddystone
06th Aug 2019 18:41

Ken says 'cut & run' but I find that just working on my own from home nowadays, you become much closer to the clients and incidentally give a far better service. Thus I think it's equally important to find a good home for them as it is to get a good sale price. Many clients become friends, too - one rang yesterday saying he was flying down to Goodwood Revival in a vintage Beechcraft and did I want to come along ? Didn't have to think about that one for long !

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By Eddystone
06th Aug 2019 18:41

Ken says 'cut & run' but I find that just working on my own from home nowadays, you become much closer to the clients and incidentally give a far better service. Thus I think it's equally important to find a good home for them as it is to get a good sale price. Many clients become friends, too - one rang yesterday saying he was flying down to Goodwood Revival in a vintage Beechcraft and did I want to come along ? Didn't have to think about that one for long !

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