How Do You Advise A Client Who Wants To Sell Up?

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I'm curious as to how you accountants advise clients who're looking to sell their businesses. (I'm a non-practising accountant).

Some background: We maintain the UK's largest directory of (and intelligence on) corporate finance firms, business brokers and other intermediaries who advise / handle the sale of businesses. There are over 1000 in the UK! We track each one's sector expertise, fees and fee structures, cross border experience, FCA status, awards won, contractual terms etc etc. My day job is using that data to advise owners of larger businesses (£5m+ in t/o) and to place them with the partner best suited to their individual circumstances and goals - whether that goal is dev cap or a minority recap or a full disposal of shares / assets. They might need someone who can find them a strategic buyer, for example, or someone else who can advise on an MBO / IPO / other option.

I know that it's a jungle out there and business brokers particularly have a bad rep (though the UK does have some of the world's best talent). My advice to owners of micro and small businesses, firms with under £1m in turnover, is to not actually hire a 'business transfer agent' or broker but to do the sale themselves. That's because the mass market brokers, the ones who'll take on tiny businesses, tend to be absolutely dreadful! Move up to the better ones and things get very interesting indeed. Despite there being 1000+ players in our little UK, the best ones are so busy that they often turn down some fantastic clients I offer them!

When bitten by the 'get out' bug, the first port of call for many business owners is their accountant. And their first question is generally about how much their business is worth. The next is about how to sell. What's your typical response? Do you send them to a broker / corporate finance firm you have regularly used in the past? Or do you let them find their own way?

One final question if you would.  I appreciate that a client business going on the market means you're potentially going to lose a client ...and lose fees. And many intermediaries pay hefty introducer fees - anywhere from 10% to 20% of their cut (which, for you, must take the sting out a bit). One even pays 25% and recently paid an introducer fee of £200K on the successful sale of a £25m business that earned them £800K in fees. I've never taken an introducer fee, the client pays me directly for my advice, but I'm curious as to whether accountants are taking advantage of this. Are you getting paid a commission or introducer fee when your client signs up with a firm you introduced?

Feel to answer any of my questions privately if you wish :) and please feel free to ask me any questions below relating to my area of expertise and I shall do my best to answer (though I've got much of this covered in great detail on my website, like this very detailed piece on the entire CF / broker eco system). Many thanks in advance.

About Clinton Lee

About Clinton Lee

Founder of UK Business Brokers, where owners find the right business broker for their company. If you want to value your business, sell your business or find out what selling involves, get in touch via my website or my LinkedIn profile.

I also blog about the latest M&A news.

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21st Feb 2019 14:03

Nobody?

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