Anonymous
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To sell or to keep my practice?

I have a “successful practice” but I’m tied, and want to move on...so sell or systemise ?

Didn't find your answer?

I’m 55 but feel old, tired and a little bored with the pressures of running a practice. Over the last few years it’s grown, and has been profitable.

At conventional rates, it has made its 40% net profit, so selling at 1x fees seems a disaster, and after clawback, probably be nearer .7 so less than two years profits.

I wanted my team to step up, I’ve taken on a consultant to help, but profits are falling, and I get constantly frustrated with it’s poor performance over the last few months. 

I’m torn, I’d love the great work we do to continue, but we seem directionless, team issues, and going nowhere.

I hate the idea of a sale, I feel I’d be selling out both my top team, and clients I really care about.

Should I look to recruit a managing director, to run things properly, as a proper business?

Or should I sell?

I can’t sleep and I’m really sad.

I would happily talk off line about this...I can discuss numbers and would really appreciate a short call, if you think you can help. Send a message and I’ll send a private message.

Or any public comments that could be helpful 

Replies (25)

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By atleastisoundknowledgable...
21st Aug 2019 08:11

Where are you based?

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By James Green
21st Aug 2019 17:25

I’ve been through this and decided to sell. The sale was a complete disaster and after 6 years of litigation I had to start again.

You probably need a long holiday and a hobby.

Happy to chat offline if it helps; PM me.

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By legerman
21st Aug 2019 10:02

Sounds like you have a successful business. Has it declined recently because of staff performance, or because of the economic climate?

My suggestion would be to employ a temporary manager for 6 months, and use the opportunity to have some time off (not necessarily all at the same time) and give yourself a break. Look at the situation again in 6 months time and see how you feel.

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By CW2012
21st Aug 2019 10:57

Funnily enough I'm meeting someone in a similar position tomorrow, a joint venture is a possibility, this would free up the current owners time by us taking on the admin work (acting as a head office in effect), save on costs, software , insurance etc for both of us.
Why don't you consider something similar, it may give you a path to a full exit in a few years time who knows.

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Hallerud at Easter
By DJKL
21st Aug 2019 11:02

Re the relationship of 1x fees and 40% net profit, do remember that your cost has likely not been factored into that equation for your time working for the practice. If you substitute in a suitable reward for yourself into the accounts and then view say 1x fees in relation to the firm adjusted profits the prospective price may look slightly more attractive.

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By JoF
21st Aug 2019 11:35

My first reaction was - that sounds just like me.

My second was - ditch the consultant. Sounds like they havent helped the work position and will not be helping the profits. I may be being unfair.

My third - your staff are probably not performing as they are picking up on your own lack of direction. Hard to break the cycle. But you absolutely must break it.

Take a 3 week holiday. Do it now before the silly season starts to head our way! The earth wont implode in that time. 2 weeks is not enough as it will take that long to de-stress as well as stop reading emails (!), so the 3rd week is for pure fun/just chillaxing somewhere without thinking of work! It works. I know, I did it my last mega stressful job. Only trouble is - I now need to take my own advice now its my own business.

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By Maslins
21st Aug 2019 11:45

Your post seems to sometimes be a bit critical of staff, sometimes positive about them. If you feel they are good on the whole, then could be worth looking at an "Employee Ownership Trust" (EOT). Not something to rush into, but perhaps worth having a look at https://theeternalbusiness.com/.

I sort of see it as a guilt free way of selling up. Definitely some potential downsides (mainly if the staff don't step up), but otherwise:
- you can get a decent cash figure for the business, albeit spread over quite a few years,
- you get to step away, on terms to suit you/the team,
- the staff then control the business, so (hopefully!) won't lead to mass redundancies and reduction in client service.

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By ireallyshouldknowthisbut
21st Aug 2019 16:09

Staff wont run your business for you, they just want to get paid at the end of the month and will follow (sort of) the rules you have set up for them, but wont often work outside of that. Hiring consultants and managers is probably not the answer. Little can be done inside of 6 months in any case from a leadership point of view.

This is probably about leadership from the top, if you cant be arsed with it any more, then the business will of course fall apart, albeit it will take a number of years for that to happen.

What made the business good in the first place?
Are you still doing that now? Im guessing not.

I agree that you don't get much for selling an accounting practice, which is why so many people stumble on with it, well past the point they have quit on it emotionally.

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By Wanderer
21st Aug 2019 16:51

Know exactly where you are. This is how to deal with it.

Decide on the income level you want.
Categorise your clients A-E.
See if any of the D's or Es can be turned into A-C, if not work out your exit from them.
'Rationalise' you staff to adjust to those required to service A-C clients & sort out the 'team issues'.

Takes some doing. It seems unnatural to walk away from fees, particularly for accountants.

Best thing we ever did!

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By Moonbeam
21st Aug 2019 17:15

Isn't it a classic marketing issue? If you could isolate the type of clients you like working with who would pay you more for things they value then you can increase the income of the practice and have more enjoyable work.
It's hard work doing this and you may need a bit of marketing assistance. And there are loads of marketing people who just aren't any good so you need to be careful about that.
But it can be done.

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By zarar
21st Aug 2019 21:05

Been there - happy to chat, PM me if you want. As you are Anon I cannot PM you

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By Glenn Martin
22nd Aug 2019 10:25

Unless you have a stack of cash I imagine your too young to pack in so don't sell as you will regret it in 2 years time when the money is gone.

What you must do though is do something.

Earlier in the year, my father was terminally ill so was trying to balance out supporting my family with a busy January and everything that comes with it.

It hit me when doing a tax return at about 11.00pm on 30th Jan "this is not working" and something had to give. I got January out the way then took the step back.

I was working too many hours for not enough fees. Too many needy clients who contacted me 24 hours a day it was suffocating.

I shed some clients, repriced others ad had a lot of full and frank conversations with everyone.

I reviewed every client individually to see what we were doing, far too much job creep had crept in. I also started reading and listening a lot more to other people, collecting alternative views to my own.

Since then things have improved a lot and I am back up to where I was in 2018, winning the right work at the right price.

If you have a staff team be honest with them, and ask them for ideas and to step up. If they don't, don't carry them.

whatever you do, do something sooner rather than later, you owe that to your family.

Happy to have a chat if it helps, we all go through the same issues.

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By Kaylee100
22nd Aug 2019 14:41

I agree with the others, you have lots of choices, but you do have to face the music and make one of them.

I suspect a damn good holiday should be the first step, before the busy season. Then you need to get this tax year out of the way and look seriously where you are going in February 2020.

Sale is one possibility. Looking seriously at the work you do and perhaps repricing is another.

You still need to think about a future sale - do you have succession in place in house? Look at improvements on fee collection, the software you use and systemising things so hand over will be easier.

We have been offered better multiples than x1 and that's because, whilst plenty of improvement still to be made, we are very profitable and we could offer flexible solutions to fit the right buyer, so we got a few interested which led to a higher multiple. You can offer that as you are young, but not if you are exhausted - the vultures will see that and pounce on you. Due diligence is exhausting - you might even regret starting the process! Remember in many ways, goodwill value is driven by you and your staff, so any buyers wants to know their investment is safe as well.

Personally, I wouldn't be getting a manager in to replace me - too costly and too risky, if you want out. The salary and on costs nowadays will eat into your profit, if you can even find someone, and you still have the responsibility and hassle of the running of the firm and, if you are tired of it, your direction won't be sufficient to make this work well. Ultimately, I guess it depends on their salary costs versus your absolute profit - only you can do those sums.

In some ways, you sum it up when you say you are tired. You need to sort that and whatever is going on first - then, when you are thinking clearer decide what you feel is best for your future.

Good luck. Its not easy but think yourself lucky you have choices - something many of our clients don't have!

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By blackdust567
22nd Aug 2019 20:49

I sought out the services of a business coach whilst running my practice at the time I had just had my first child; this person has been coaching me for 5 years now and has made a tremendous difference to the business, profitability and importantly work life balance as well as handling any team issues. As a sole practitioner, having someone like that to keep me and the business on track has been invaluable. Perhaps a review of the consultant you are using is required - do you feel you are getting enough value and support from them? I agree with others, try and step away for a couple of weeks and see how you feel then. Work out what your personal goals are and if you think you can reconcile with the business. Grading the clients and offloading the bottom end is very satisfying, something we do every year - that’s also had a major impact on work/life balance and profitability

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By HowieTNC
27th Aug 2019 09:59

Not sure where you are based. It's tough to get over that hurdle from sole-practitioner to a wider practice but 'systemise' is about the only way and should empower you staff to deliver the quality & results that you want to see. We are just about there and starting to grow and profitably and more importantly without me! (or at least at the coalface) .

Still looking at ways to grow, if you are local to the Cotswolds maybe we could do something together?

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By Tross
27th Aug 2019 10:45

I'd probably put another recommendation in for joining up with another firm. A lot of firms are looking to grow their client base at the moment and will be a win win situation if terms are favourable. You could look at selling, but my thought is that at 55 you may live to regret it after a couple of years.

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By weuk
27th Aug 2019 12:52

Exactly what I hear from the Accountants I meet at my local branch for CPD events. There are a few solutions available or should I say business models. As an Anon I can not PM you but happy to chat. PM me if you want.

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By JD
27th Aug 2019 13:40

Lots of good advice, but I would add that as a gentleman of a certain age, if you are feeling low on energy/motivation, gently I would suggest getting yourself checked out at the Doctors. You are after all at just the right age and stress level for one or two obvious joys. Don't ignore the signs, if that is what they are.

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7om
By Tom 7000
27th Aug 2019 15:47

A full time manager will not work with you not there . If they were that good, then they would simply run their own thing... and if you are not there in time all the new clients will see them as the Accountant and not you and all your goodwill is gone. The manager goes and so does the clients.

It might work if you were there 3 days a week and you did sales and marketing and they did operations and admin

But it depends what you like doing....

There is the option of a merger, but would you want to merge and be the boss or the employee?

Cos you can merge with me if you want and you don't have to make all those hard decisions any more and deal with all the compliance and change the light bulbs etc etc . You can just sit quietly and crack out a few sets of accounts and I'll give you 50% of whatever you bill the clients?

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By jamesallison
28th Aug 2019 08:25

This is so sad to read but your honesty is such a positive step.
Where are you based?

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By rich brewin
28th Aug 2019 11:23

Well done for being brave and speaking out. So many are in your position and continue in isolation. You'll probably be inundated with replies (a good thing!) but, having been in your position, come out the other side and now working to help those in the same boat, I'd love to have a chat to see if I can help you to clear your mind.

Whatever you do, please remember this:
1) You look to have a good firm
2) Your situation is common in 'good' firms
3) You don't have to rush your decision making, you need clarity first.
4) The solution may not be difficult, just hidden by a few obstacles right now.
5) It's good to talk

Good luck.

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By Anita Jarvis
30th Aug 2019 15:56

Hello Anonymous,

Please be gentle, this is the first time I have ever posted anything on here.

I know exactly how you are feeling, but personally have made the decision to try and sell up. I am on here now looking for hints on how to go about it, however came across your post instead.

Can anyone recommend the best way of going about selling my fees?

Is it worth using an agent and if so which one?

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Replying to Anita Jarvis:
7om
By Tom 7000
30th Aug 2019 16:22

Yep. Find the firm that's nearest to you. Call the boss and ask him if he wants it. 75/25 he will say yes. No agents fees and you just negotiate what you want.

If he doesn't want it ring the next nearest one.

Clearly if your turnover is £5m and the nearest one turns over £75k its not going to work, unless he recently won the lottery. But you get the idea.

If you rang me up we would already be having biscuits and drinking tea and plotting :)

Remember distance is key, if you are in Edinburgh theres no point selling to someone in Nottingham. The clients aren't going to travel....unless you have some weird online arrangement with them.

GU14 7LY is my postcode in case you are at the bottom of my street :)

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By Anita Jarvis
30th Aug 2019 16:54

Already tried contacting firms close by, they all say they are not interested in additional fees or are thinking of retiring also.
We are based in Cornwall, the land of low income, low fees, rubbish internet/phone reception and beautiful views.

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7om
By Tom 7000
30th Aug 2019 17:18

How strange. If it was me I would snap your hand off. I would also want to know who the others were wanting to retire, buy them and if I had 6 offices in the same area... I might just have a local Monopoly... that's the end of rubbish fees....

Then sell a 6 office firm with higher fees and better profits and more retirement gain on the eventual sale and surprisingly no CGT :)

Hey theres a plan ?

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