I often speak to retiring Partners and Directors of Smaller Accountancy Practices. (1-5 Partner firms)
One of the key themes that I see regularly is that succession planning in general is not taken into account until too late.
Firms don’t have a tier of Management beneath the Partner that have been trained to take over. Or if they do, they don’t have the capital to buy you out.
How to get more value from your practice sale?
- Look to train a Practice Manager to pass on some of your Partner duties, that might be client facing roles, or back-Office support. You need to take “you” out of the business.
- Most buyers want the seller to stay on as a consultant for a couple of years to transfer the goodwill of your client bank to the buyer. Factor that into your timings for retirement.
- It will be obvious, but make sure your accounts are up to date, and you can provide an adjusted profit and loss to the buyer.
- Have your redacted list of gross reoccurring fees (GRF) up to date for the buyer to review. That is fees billed and received in a given twelve-month period, that have reoccurred.
- Some buyers will want to take on your team, as they know the clients. Prepare an employee summary, detailing their qualifications, years of experience, fields of work.
- The buyer may put their own IT in place, but some will buy it off you if it is serviceable for the future.
- The buyer may want to change suppliers on completion, negotiate with your suppliers in advance to get onto a rolling monthly agreement.
The key message here is to be prepared, and plan ahead, don’t leave the decision of passing on your practice until your health deteriorates.
There are several good brokers for our profession, some may already be sending you their email marketing.
I will be at Accountex London on both days, if you’re looking to generally discuss your practice retirement planning, please stop me for a chat.
I really enjoy having conversations with other accountants coming to terms with what is the end of their life’s work.
Chris Smith FCCA