So current events in my family have made me seriously think about selling up and retiring. Has anyone had any experience of this? How would you go about it? I get these emails about clients wanting a block of fees willing to pay up to 1.3 gross fees. Is this realistic? Sorry may sound stupid but anyone have any advice?
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Big subject. Possibly too big to do anything more than skate over the surface here. Firstly you may want to consider if trying to sell is worth the time effort and disruption. As a first step do you know of any local competitors who might be interested ? Also a conversation with an agent may be worth having. People often over value their businesses. Just because they have made a living out of it does not mean someone else will, or even want to try.
Contact Nicola Draper, Draper Hinks. Nicola used to post on here, not seen her for a while, but she has been recommended a lot on aweb over the years.
Yes, Nicola is still very active and has been a contributor to at least two ICAEW webinars this year, about exiting from practice. She's a very easy person to talk to.
She has a good website with a very helpful section of FAQs:
http://draperhinks.com/frequently-asked-questions/
Yes I've done it.
We used a broker.
From my experience the x fees is very open to negotiation so you'll need to put your best sales hat on to get the best multiple. We did manage an offer of 1.2 but, actually, didn't accept it. We picked slightly lower as we preferred the whole package.
Buyers fight to stay under x1 and clawback agreements can make a big difference as to how much you eventually clear.
I suspect the buying market is very different now than our sale which was precovid. I have no experience of this but I'd imagine your staff will be as in demand as the client base as staffing is the biggest struggle I hear about.
How digitalised, how profitable and how portable your practice is makes a difference.
As others say far too much to cover here but imagine you are advising a client!
Be prepared to invest a significant amount of time in due diligence answers and money in legal fees and runoff cover.
The size of the practice will be very relevant.
If it's just you, with a modest portfolio, probably fairly easy to sell (plenty of people who like the idea of running their own practice but want a starting block to go from), but you'll almost certainly need a broker.
If it's more established with multiple staff, is an MBO or EOT an option? Our founder sold the business to an EOT ~2 years ago.
We've purchased a few, over the years, and have never paid more than 1 x GRF on the basis that we *knew* we would retain almost all of the clients (which proved to be the case). Usual clawback clauses but they were never needed.
We also lost out on several where the vendor went for higher offers only to see the buying firms raise fees, alienate the clients they didn't really want and end up paying less than our original offer.
Were I selling I'd be looking for a local firm with a good reputation and someone you can work in conjunction with for a sustained period of handover/consultancy. This would trump the GRF multiplier for me.
I'm glad you asked. I'm 68 and had a spell in hospital at the beginning of this year when I found out I was not immortal after all. Then it hit me that I didn't want to die or otherwise cause my clients/relatives annoyance whilst still trading.
Having sought advice on Aweb about selling, my many friends on here advised me to speak to lovely Nicola Draper of Draper Hinks (email [email protected]). I thought she wouldn't be interested with my small level of fees.
How wrong I was. She set me up with a day of interviews. I spoke to 5 other practices and got several offers, ranging from 1.1 to 1.3 times recurring fees.
I took an offer from the person I liked and trusted the most. With care, we hope all my clients will sign up with the buyer. We've collaborated practically every day in the last few months to ensure it all goes well.
Nicola gave me the confidence to go ahead. She coached me how to run the interviews, and was there for me to discuss the offers with.
My buyer had purchased a much larger block of fees before and his experience was invaluable. I would caution against selling fees for the first time to a buyer who didn't have that experience, but the crucial point about the buyer is that you must like and trust them from the start.
I've read some dreadful stories about other fee sales and I was concerned from the start that I could be caught out due to my own lack of experience.
Because my buyer and I recognised similarities in each other and were both keen to act with integrity we've come through the gruelling period of getting clients to sign up with him and have very nearly emerged the other side still liking each other and communicating well.
So think of getting a buyer as similar to getting a mate. It's hard work and you may sometimes lose your rag. But as long as you respect each other all will turn out OK in the end.
And Nicola just charged me a small fee for the cost of advertising my practice (without naming it or me). The buyer pays her fees when a practice is sold, so what's to lose?
So why not give her a call?
Several people on Aweb told me before that they'd had a detailed discussion with Nicola well ahead of when they wanted to retire, whereas I had the discussion and within a trice my practice was being advertised for sale.
I recommend Nicola for a damehood at the least.
Thanks for your kind thoughts, Tom123. I'm OK at the moment, but the whole episode reminded me I didn't want to get bounced into retirement. I've heard of so many accountants in their 80's either dying in office and/or leaving a huge mess for their successors as they gradually stopped keeping up with changes in regulation or technology.
I wanted to go when still competent.
The nightmare has just happened to me. Husband died five weeks ago - practice of 200+. After a very short (as in weeks) illness. There was a firm in the wings arranging to buy. It has had to be rushed as I had to call on their help suddenly. I couldnt possibly go into the absolute horrors of sorting an office out. All equipment is leased. Its still paper based so hundreds of files. And I have been immobile with a badly fractured ankle. It has been a dreadful few months. Sell and get it tied up. My husband never got to retire.
My father died in 2003 and never got to retire. I had to step but had great support from the Contuinity group
We are in.
I'm so sorry to read this. Not only do you have the grief, and all the bank account hassles, you also have a business to dispose of. At least you already knew of the other firm. Although it's all been rushed to transfer over the business, the other firm will do most of that work and it won't be the long lead in that you might have had otherwise.
I'm really sorry your husband didn't get his retirement after all.
I hope all the admin stuff is sorted soon for you and that your family are helping you adjust.
Well my wife is seriously il in hospital with liver and kidney failure from an infection. Hospital have been fantastic though. Hopefully she will recover but it’s going to be a long road. Puts it all in perspective and with her at 59
And me at 56 I think it’s time to retire. With mtd coming as well I’ve pretty much had enough. Sell up, move up north where it’s cheaper and cut out the spending. Fed up with all the crap we keep getting. Sodding hmrc and everything.
My heart goes out to you. I strongly feel that the earlier you retire the more likely you are to have many years ahead of you. I couldn't have afforded to retire much earlier than I did, and have been chucking large amounts of cash into my pension pot over the last 10 years.
If you can afford retirement now, you have the perfect reason to go ahead. Just speak to Nicola and she will wave her magic wand for you. It took me 3 months from that point to get the job done. And if you're not sure about anything, Nicola will know the answer.
I have just been a keynote speaker on a webinar for the ICAEW about exiting from practice.
If you are wondering if it is worth selling your practice or are unsure about how the whole process works, I would be happy to have a chat with you. It will only be done on a no-obligation completely confidential basis. You may have lots of questions and don't know where to go for good honest down to earth advice.
I talk to lots of accountants. I had a chat with someone this morning and told them that now was not the right time for them to put their practice on the market. They need to wait for a couple of years. I am working with another vendor with terminal cancer, we are treating that as a matter of urgency and a deal will be done in couple of weeks.
I only give my honest opinion which is based on doing 400+ deals. I will not discuss anything confidential on this forum but can give general advice if that would help.