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Sell your practice without closing the ledgers

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So you want to sell your practice but you don’t want to retire. Norman Younger weighs up your options.  

8th Jun 2021
Director Maximiti Limited
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After a barnstorming year for many practices due to the unprecedented levels of client support required due to the pandemic, 2021 has surprisingly started off with a marked increase in accountants wanting to retire.

In truth, many say that they want to retire from running a practice but are not ready to close their ledgers for good, either because they cannot afford to or because beancounting runs through them like a stick of Blackpool rock.

So, what are the options for the burnt-out baby-boomer accountant who doesn’t fancy a life on the golf course?

Let’s examine five routes to retirement while ‘keeping your hand in’.

Sell the whole practice

A popular option is to sell the entire practice but continue working for the buyer full time or part time with a view to reducing the hours as time goes on. 

Buyers tend to like this as the continuity mitigates any concerns clients may have about the new incumbent and allows the buyer to remain focused on their existing operation.

2. Gradual exit

Selling chunks of fees over a period of time will reduce the stress of having a larger practice, but there remains the issue of which ones to keep and which to jettison.

But it suffers from the drawback of tying you up with the sales process more than once, and in the early stages may well keep you running your practice at a level you would rather not be doing.

3. Consultancy route

Sell everything and undertaking consultancy is another option, especially if you have niche skills that are in demand. 

The fly in the ointment here is that you may well have to start fresh marketing to go hunting for clients and that can take time, expense and a lot of effort to promote yourself.

4. Virtual FD

Stepping into a business as a virtual FD has become more common in recent years, as companies get a qualified accountant part-time at a fraction of the cost of a full-time employee. Many accountants work for three or more businesses and split their time according to demand but there is no reason why you cannot take on a single company one day a week or several days a month.

5. Lifestyle practice

How about the much vaunted “lifestyle practice”, working when you want and as much as you want? This could be the best way in the era of creeping and ever complex regulation - working smart, with a lean operation and focusing on certain types of client or advisory services.

By setting a strict limit on how hard you wish to work you can survive and thrive on a small cohort of niche clients that are lucrative but don’t come with the stress of running a practice. You can create a waiting list for your services if your reputation precedes you, if for example you are taking on ad hoc assignments such as business reports, management accounts or tax work.

Accountants in the twilight of their careers have never had such a choice. The question is simply which option to choose.

Replies (8)

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By TASG
08th Jun 2021 12:00

Why would anyone buy the specific chunk of fees the seller wants to dispose of?

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Replying to TASG:
Norman Younger
By Norman Younger
08th Jun 2021 20:49

Obviously part of the due diligence is to establish why this chunk is being let go of. Often they sell a large chunk but retain very close friends and family. People do buy.

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By meadowsaw227
08th Jun 2021 12:36

It will be the close down route for me with a "Dear John" letter to the clients.

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Replying to meadowsaw227:
Norman Younger
By Norman Younger
08th Jun 2021 20:51

Why do you not wish to cash in on what you have built up, if your practice is of any reasonable size and you have time on your side?

I have seen this done but with very small fee banks where the game wasn't worth the candle for the vendor

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Replying to Flying Scotsman:
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By meadowsaw227
09th Jun 2021 13:43

Now only currently running at approx £135k + pa , doesn't seem worth the hassle involved if my first forays into the practice selling "game" are anything to go on.

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Replying to meadowsaw227:
Norman Younger
By Norman Younger
09th Jun 2021 15:17

"Only" ? Many accountants would bite your hand off to acquire half that level !
There is always hassle selling up, it goes with the territory.
I can't comment on your first experience but don't squander your £135k worth

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By Homeworker
09th Jun 2021 11:04

I have been gradually transferring clients to another practice for commission - not the best solution for me personally, as no CGT relief, but it is being done over a period of years, as I gradually wind down and it would be impossible to work it out on a CGT basis as I had no idea at the start who would be willing to be transferred.
Now I am left with a reduced number of clients, many of whom have been with me for over 20 years and most of whom are elderly. I would be happy to keep them on but the cost of tax software, insurance (5 year run-off!), AML and membership fees means I will have to think carefully what to do next year and I certainly don't want to get into quarterly reporting for landlords in 2 years time. Trouble is at least 2/3 of my remaining clients have income from lettings, so it looks like the costs may outweigh the income if I keep going beyond then....

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Replying to Homeworker:
Norman Younger
By Norman Younger
09th Jun 2021 12:13

Not letting tax tail wag the investment dog , so to speak

It is an approach that is often brought up but most sellers prefer the clean break as they don't like to keep their risk running for longer than required

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