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And I'm out...(but how?)

Tips on selling a small practice

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Hi All,

It's over. Next year marks the 20th anniversary since I started training for my ACA qualification. It was, on the whole, a slightly fortuitous leap into the unknown (post-uni, dropped out of teacher training scheme, was unemployed) and I can't complain (too much) about the money. I've also, over the years, mostly landed on my feet. I've met some great people. And some absolute d_______s.

It's also the milestone when I get near to the age where a close family member died. And I'm left looking down the path of life, and simply thinking: I don't want to do this anymore. I've had some wobbles in the past, but this is it, I think. Too much is about to change, and though I'm technically capable, I don't have the heart for it. I have other things I want to do, and try. And the smart-phone era of being constantly on call is wearing me down (I'm addicted in the sense that I can't leave my phone alone and can't stop thinking about incoming messages, so have to answer them.) I want to go on holiday and truly, truly switch off. Or wake up one morning knowing that nobody, nobody, will be chasing me for anything, or will have had a letter from HMRC bringing some new and mindless piece of persecution.

Anyway, I'm out. I have a small practice. I turn over about £150k, of which I'd say just over £100k is recurring. Take off the dogs and the soon-to-be-retired and there's probably about £75k of value in there. Enough to keep me going while I find my feet elsewhere. Having been a member of AVN in the past, and currently a member of 2020, I've got many of them on monthly DDs and have been pushing clients onto Xero in the past couple of years.

So my question is: what do I do? I'm not inclined to use an agency. Not that I don't value their expertise and ability, but I'm very much on the small side, and even modest fees would eat into the proceeds. I'd much rather discreetly call or visit some larger local competitors and feel out the territory.

So: has anyone experienced this at all? I'd appreciate any practical tips. I promise, this isn't an advert by some other name. I'm not even sure of my timing yet - will get January out of the way. And then find some way to mention it to my wife.

Thanks,

WS.

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10th Jan 2017 13:42

Where are you based ?

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to bernard michael
10th Jan 2017 13:47

Southeast. Medway & Maidstone area. Sorry, don't want to get too specific as the last thing I need is anyone guessing who I am (for obvious reasons).

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10th Jan 2017 13:52

Thanks

The reason I asked is that a friend is looking to acquire, but not in your area.

Good luck

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10th Jan 2017 14:11

It depends on your relationship with the local firms around you but one of the smaller practices in my area did exactly what you are proposing and did the rounds to have an 'unofficial' chat about selling his firm. It was a bit larger at circa £300K but one of the practices snapped it up. It seemed the sensible approach to me.

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to The Highlander
10th Jan 2017 14:20

Thanks for the info. It seems a sensible course to take, and it's good to know that it actually works in the real world. I'm somewhat of a loner, and whilst I don't have bad relationships with any local firms, that's mostly because I don't actually have any relationships at all with local firms. Still, at least I haven't annoyed anyone.

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10th Jan 2017 14:42

Would second this. Have seen take-on's a couple of times where a smaller one man band is simply brought out by the larger firm, taking over their clients. Normally there is a transition period where both you and the 'new' accountant both go and see the clients but that would be dealt with as part of whatever deal you strike.

Have a word with the bigger firms around, make appointments with their partner/directors and see what you get.

And good luck :)

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to IgnoreDaily
10th Jan 2017 14:47

Thank you.

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10th Jan 2017 16:00

Take a step back.

Get rid of your [***] clients.

Let all clients know well in advance that you will be taking a long holiday, and you won’t be responding to their calls or emails unless HMRC are at their door with a gun to their head.

Take a holiday – a minimum of two weeks. If possible, pay a trusted colleague a decent wedge to look after the practice for a month to keep things ticking over.

If you feel the same after your holiday, then look to sell.

A rush sale when feeling down about work, and a family bereavement to boot might be something you later regret.

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to cheekychappy
10th Jan 2017 19:04

Unfortunately, all you suggest has been done - the breaks, the dipensing of PITA clients. The decision has been a long time coming, and I can't see a way back from it this time. If things could continue as they were, then perhaps, but the world is moving and I can't be bothered to keep up anymore - it's a complete lack of enthusiasm for the profession any more.
And just to confirm, the family bereavement isn't recent - it's that I'm now reaching the age of that person when they died several years ago. So it's constantly on my mind that it's better to seek the life you want now, rather than plan for a future that you may never get to see. Not that I'm suggesting living unwisely - quite the opposite.
And it won't exactly be a rush sale - I'll start making discreet enquiries once we've got January out of the way, and ideally would like to get something finalised by the summer.
Thanks for your comments - very sensible suggestions, even if they don't quite apply.

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10th Jan 2017 17:08

Contact FT he will be all over your Xero clients and agree the deal over a cup of tea and a scone.

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to Glennzy
10th Jan 2017 19:04

As much as I'd find such a meeting very interesting (and I mean that), he's just not local enough for my clients....

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10th Jan 2017 18:43

Just checking that you realise the broker's fee is paid by the buyer, not the seller.
Personally, I think I'd use a broker. I'm not sure I understand why you don't want to.

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to Red Leader
10th Jan 2017 19:05

Thanks for pointing out the situation with regard to fees - I was clearly mistaken on that point.

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to Red Leader
11th Jan 2017 14:32

I have spent (wasted) a lot of time of trying to buy fee banks this last 2 years. There is a massive difference in the standard of agents I came across. The fees, and who pays them also seem to differ a lot.

I think a split of 50/50 between seller and buying seemed a fairer approach and more likely to result in an outcome that suited all parties.

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10th Jan 2017 19:10

I've got a client who arranges mergers and takeovers with businesses and he's said that he's now looking at profession businesses so if you are interested I can put you in touch with him.

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to petersaxton
10th Jan 2017 19:44

Thanks Peter, but if I did go with an agency I'd probably go with one that's specifically worked with accountancy practices. I appreciate the offer, though.

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10th Jan 2017 22:10

Hello WS

I am sorry about the way you feel. You have clearly thought about your next step. I do not believe that; I can add anything that will change your mind. I respect your decision.

You are a person, based on your contributions on AW, I highly respect.

You are in a market where potential buyers far exceed the number of sellers. I cannot see you having problems in selling your fee bank.

They are some good accountancy practice brokers, Jeremy Kitchen being one of them. Please use an agent it will make it easier for you. Of course, your decision.

Thank you for your honesty in your post. I hope it works out for you.

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By tom123
10th Jan 2017 22:56

A PM to Kent Accountant should do the trick - you're not too far from him I'm guessing

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By Mr_awol
11th Jan 2017 10:04

You sound a little further away than we would be interested in.

I do know of one firm who have recently made an acquisition in one office and who I hear are moving another office from Ashford to be closer to you. They might be interested I suppose. Also another multi-office firm in Maidstone who might just swallow you up, if you're not too small for them. Trouble is I cant decide if they would appreciate or resent their names being put forward (slightly awkward moment).

I'd suggest as above, discreet enquiries with some of the local practices - starting with the mediumish sized ones perhaps. Or get an agent to do it on your behalf.

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By Maslins
11th Jan 2017 10:47

I'm sure many of us (including me) can sympathise with your thoughts...though for a few it is just a "bad day" and tomorrow is better. Sounds like you've decided this isn't the case for you.

As others have said, I would recommend using an agent. It's a significant transaction, a bit like buying/selling a house. Their experience will be invaluable in helping you avoid pitfalls. They'll also likely know some practices who may be interested in buying, and they'll know how best to do it subtly, minimising risk of damage to your brand.

Whilst most accountants wouldn't dream of doing this, do be aware that if you approach lots of accountants saying you're considering selling, you could get one with no morals who attempts to find out who a load of your clients are (not that hard if you're their registered office address) and write to them saying you're thinking of quitting so they should jump ship now. Could be worth getting an NDA, as whilst it may not be worth the paper it's written on, it might just scare some who might think about acting unethically.

The world is moving very fast, and whilst accountancy was probably considered one of the safest professions for a lifetime career a few decades ago, it's currently one of many where improved software and algorithms will increasingly make many redundant.

I'm geographically fairly close to you, but we're not looking to buy I'm afraid. Good luck with it...and as First Tab says, it does seem to be a seller's market at the moment so you should find a buyer.

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to Maslins
11th Jan 2017 14:26

Very good point there, and thanks for highlighting it. It's easy to assume that everyone would behave as I would in this kind of situation (and indeed I had a phone call last October from someone who laid their entire plan and details open to me despite the face that we'd never met and she only found me through a google search.) Another good argument for using an agency.

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By happy
13th Jan 2017 11:35

Been there and done that.

I sold a similar practice took a year out couldnt find anything that would enable me to earn such easy money and did it all again but taking on board lessons I'd learnt and now have a pretty cushy number.

I'd say do it and enjoy it and use this super lady who will guide you through the process very well -
http://www.draperhinks.co.uk/

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13th Jan 2017 12:06

all the broker does is email the local accountants anyway and ask em if the want it and the buyer gets the hump they have to pay the fee Whose the local co with 20 staff nearby who can easily absorb you and has the cash to do so. If you were near me...its a done deal ..like is said above too far away doesnt work ( GU14 is my stamping ground)

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13th Jan 2017 14:20

Back in the day, when I worked at one of the big multinational firms, they had a business development manager and one of their jobs was to keep in touch with the smaller firms in case they had any work they couldn't deal with (restructuring, corporate finance, corporate recovery work etc).

Don't know if they still have such people, but they tended to know useful snippets of information such as who might be looking to buy or sell fees. A phone call to one of the big firms locally might be worth a try.

Another suggestion would be to call or drop an email to your local district society via your regional executive (Find your region here and the staff contact details are at the bottom of the local page http://www.icaew.com/en/groups-and-networks/local-groups-and-societies/u...) - they might know if anyone is looking too.

Obviously, you would want to ask either source to keep it confidential until you were ready to reveal yourself!

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