In spite of the economic outlook, if you are looking at selling your accountancy business, now it is a good time to act, writes accountancy firm broker Jeremy Kitchin.
There has been a lot of doom-mongering on AccountingWEB.co.uk in recent months about the generational timebomb that is going to engulf Baby Boomer accountants. Those accountants planning their exits have been warned that they will face an increasingly difficult time trying to realise the amounts they expect from the practices they have built up over the years.
Yet first-hand evidence counteracts some of these claims. Rather than seeing buyers shy away, there is significant demand out there in the market place for good quality accountancy firms. It's clear that people have been holding back from selling since around 2007. But the economy is slowly beginning to improve in certain market sectors, and accountancy practice is one of those.
The practices that have asked my firm to help with their sale are attracting a very healthy level of response. Even in difficult times, good accountancy businesses do not stay on the market for long.
Clear signs of renewed confidence in the sector began to emerge towards the end of last year. There have been more buyers than sellers in this specialised field. Four or five years ago there was a lot of activity, but it dropped off in September 2007 for a couple of years.
But there was a significant increase in the number of sale instructions received in the final quarter of 2010 compared with the previous year. Since February 2011 we have had a gratifying number of enquiries.
Two years ago, we took on a general practice and found 106 would-be purchasers, while other new sales generated serious interest from 20-30 firms, with many attracting well over 30 initial applicants.
As with the housing market, the economic downturn has seen a reduction in the number of first-time buyers because banks and financiers are being more careful about who they lend money to.
Is the price right?
With his daughter Lucinda, Jeremy Kitchin runs Jeremy Kitchin Practice M&A, a specialst broker that trades as APMA.