When the time comes to pass on the torch of your practice, whether through sale or succession, the process can be as complex as any case you've handled. It requires meticulous planning, strategic decision-making, and an understanding of what will make your firm attractive to potential buyers or successors.
In Preparing Your Practice for Sale or Succession, Keith Underwood and Kevin Reed provided some essential do's and don'ts to guide you through this critical phase.
Do's of Preparing Your Practice for Sale or Succession
Embrace Change: In today's market, practices that are paperless have a significant advantage. The transition from paper to digital systems can be daunting for potential buyers, so having this already in place is a strong selling point.
Offer Post-Deal Consulting: Be open to providing consultancy services after the deal. This helps ensure a smooth transition and demonstrates your commitment to the firm's ongoing success.
Plan Your Post-Sale Life: Knowing what you'll do after selling your practice can help you approach the sale with a clear mind and focused goals.
Keep Meticulous Time Records: Accurate time records are not only important for work in progress but also for presenting a well-organized and professional image to potential buyers.
Address Tax Concerns Proactively: Work through the tax implications of the sale, whether it's an asset sale or a share sale, and plan accordingly.
Don'ts of Preparing Your Practice for Sale or Succession
Avoid Long Leases: Entering into long-term leases can be a deterrent for buyers who may prefer more flexibility in location or space requirements.
Don't settle for the first unsolicited offer: Instead, profile your business professionally and introduce it to multiple suitable buyers to leverage your position in a seller's market.
Don't Neglect Modernisation: Relying on outdated paper records can turn off potential buyers who are looking for a practice that's keeping pace with technological advancements.
Don't Be Location-Rigid: With the rise of remote work, being flexible about the firm's location can open up more opportunities and attract a wider range of buyers.
Don't Rush the Handover: A short handover period can lead to problems. Ensure there's enough time for you to assist and advise the new owners, reducing the risk of operational hiccups.
Don't Ignore Junior Partners' Goals: Failing to consider the ambitions and career paths of younger partners can lead to dissatisfaction and could complicate the sale or succession process.
Selling or passing on your practice is a significant milestone that requires careful preparation. By following these do's and don'ts, you can increase the likelihood of a successful and profitable transition. Remember, the key to a smooth sale or succession lies in the details—plan ahead, be thorough, and always keep the future of the firm in mind.
For the full session, please click here. In this course Keith Underwood and Kevin Reed cover the following topics;
- Introduction to the market for accountancy practices
- Market conditions impacting sole practitioners
- Market conditions impacting 2-3 partner firms
- Market conditions impacting 4+ partner firms
- Commercial interest in your practice + don’ts and dos
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.