I had a call on Monday 7th November 2016 from a potential vendor. He told me that he was looking to sell his practice, in fact it wasn’t his practice, it was his wife’s practice that he wanted to sell. He had joined the business just a year before, to help with business development. He had already been dealing with a buyer for the practice but they were dragging their feet and he was feeling very frustrated and knew he needed a change to get things moving. Which is why he contacted Draper Hinks.
His background wasn’t accountancy, he had worked in a completely different field, his wife had worked for the inland revenue for over a decade and had set up on her own and was doing well. They wanted to grow the business and he decided to give up his career to help hers. She had sacrificed her career prospects early on in their married life to travel around the country supporting him with his various promotions within his chosen industry.
They both decided it was time that he supported her. He had a proven track record of being able to grow a business and they decided his skills were transferrable so he handed in his notice at work and joined her accountancy practice. All was going swimmingly until she became ill a month later. She was diagnosed as having cancer and so underwent all the treatments available. Luckily it was kept under control and between them they were able to manage to stay on top of the work.
All accountants know that deadlines are relentless and clients are understanding up to a point, but they still need to have their work done, whatever the circumstances. He was able to do the routine compliance work but relied on her to do the more detailed tax computations. They got by and the result was a very loyal and understanding client base.
However, the illness came back and I got the call at the beginning of November to see if I could find a buyer as a matter of urgency, the diagnosis was that she only had a few months to live. We were told that she had six months, a reasonable time for it to all go through. The vendor already had a lot of the information we needed to market the practice, because they had previously been talking to a buyer, who could not make their mind up as to whether they wanted to buy or not.
Within a couple of days of the phone call we were told that the illness had spread and we were now under the time pressure of there being only three months instead of six.
We were able to go straight to market to sell the practice and had replies from 7 potential buyers. I spoke to each of the buyers, two pulled out because the practice was too far away, one said the fees were too large, one said it was the wrong time of year to be buying fees and could we wait until after January when they would have more time to deal with the purchase and one said they were very interested but couldn’t see how they could fit the fees into their office that was running well over capacity to cope with what the clients they already had. That left two buyers that both said they were keen to proceed.
By phone, I interviewed both potential buyers on Friday 11th November and it was agreed that both firms would meet the vendor the following Monday. A hotel meeting room was booked, the buyers were given times to attend, one in the morning and one in the afternoon. I agreed to attend the meeting day to make sure things progressed smoothly and quickly.
On Monday 14th November I was in attendance. I met the vendor half an hour before the first meeting of the day to be told the time had reduced again and now instead of three months we were looking at 3 – 4 weeks. He was not in a good place and so I had to do what I could to help him through the meetings. I was there to facilitate the negotiations but at times I took over the running of the meetings, guiding both parties with the way forward.
His wife had been working part time up to a couple of weeks prior to the meeting day. However, she was now having to have palliative care and was house bound. The vendor had to stop several times through each meeting to brush away tears when talking of his wife and why he was selling the fees. The two firms that wanted to buy were understanding. I made sure that neither of the buyers took advantage of the situation and was impressed that at no point did I have to intervene in either meeting. We were all there to talk about one party selling and one party buying.
Both firms put in an offer. One wanted to do due diligence, one didn’t. Both offered a fair multiple for what was being sold. The firm that didn’t want to do due diligence had their offer accepted and within two weeks of the meeting day the deal was completed. Already clients had started to drift away but most were transferred to the new owner.
I am sure all accountants have clients that have been through difficult times with health issues and sometimes, as service providers, we have to see the person behind the business and go above and beyond because it is not always about money but about giving the absolute best service you can give. That is why if you have come through another January consider yourself one of the lucky ones. It is not the first time we have had to deal with a situation like this and I am sure it will not be the last.
If you want to talk to us about selling your accountancy practice or buying an accountancy practice we are here to help. Contact me Nicola Draper at n.draper@draperhinks.co.uk.
Please remember everything discussed will be kept in the strictest of confidence.

I am sure there are a million things I could be writing in my blog this month but I am suffering from a bad cold and my brain is full of cotton wool and broken biscuits.   I can manage my day to day duties fine but when it comes to sitting down at my computer and trying to be creative with a blog – no chance.

I run my own business and know that if I don’t do certain jobs they will not get done.  I am sure there are a lot of accountants out there that feel the same when under the weather.  Yes you may have staff and yes they may do a fantastic job, but where certain jobs need to get done and it is only you that can do it, the pressure builds up.  Stress can be the result.  This cannot be better demonstrated for the accountancy field than the extra work that comes in during January.

At this time of year we get many accountants saying they will do one more January and then they will sell.  We already have a raft of sellers who say they want to start the process of finding a buyer in February or March 2017. They are filled with trepidation and anxiety looking at the months ahead and the mountain of work they are going to have to get through between now and then.

However, I will predict now, as I sit here typing, that in February 2017 there will be a number of accountants that will have changed their minds.  They will get to February, feel exhausted and washed out.  They may have been working 7 days a week for many weeks and hate the sight of a tax returns.  But when the money starts coming in at the end of the month and they have had their best billing month of the year, coupled with a few good nights of proper sleep uninterrupted by the things they have forgotten to do, it is amazing how the stress and worry is soon forgotten.  In fact they can become positively cheerful.

There are two times in the year where we get a lot of sellers – February and September.  The reason why February is busy for us is obvious.  September is busy because some accountants go on holiday and realise that if they sold their practice and retired they could have more holidays.

We also tend to get a rush of buyers in February and March each year.  They too have had their best billing month and so start to think that if they acquired fees their best billing month could be even better the following year.  With coffers full of cash buyers are ready to invest in an acquisition.

I would say to anyone thinking of selling their practice, do not wait until February or September.  Contact us when you are ready to sell.  Obviously December and January may not be the best months to start to find a buyer.  But if you find that you are in a situation where you have to sell then we will do our best to find someone suitable to take on your practice.

Don’t get me wrong, we have sold practices in December and January.  A potential vendor contacted me in December one year and said he had to sell his practice because his doctor had told him if he didn’t he would die.  He had suffered a heart attack and the stress of running the business was the main factor in his condition.  I found his reason a very compelling argument and we managed to find him a buyer despite the time of year.

So if you want to talk to us about selling your accountancy practice or buying an accountancy practice we are here to help.  Contact me Nicola Draper at n.draper@draperhinks.co.uk.

Please remember everything discussed will be kept in the strictest of confidence.

Any buyer looking at buying accountancy fees is looking to minimise the risk and maximise the retention.  Any perceived risk will have a downward pressure on the amount offered to the seller of the accountancy fees by the buyer.  There are many things that a buyer will take into consideration when considering putting in an offer for an accountancy practice.  The following is not an exhaustive list but covers the main areas that will be looked at by all buyers.

Factors a buyer will take into account when buying an accountancy practice

• Perceived risk.
• Age of clients.
• Work done.
• Fees charged.
• Where the vendor meets the clients and if a lot of travelling is involved.
• WIP.
• Debtors.
• Recovery rates.
• Profitability.
• How long the client has been a client.
• PI claims.
• Availability for doing a handover.
• Tranche payments vs one off discounted payment.
• If staff are to be taken on.
• If an office is to be taken on.

A buyer normally pays the seller on the basis of a multiple of fees.  The term fees has to be defined.  It normally relates to the gross recurring fees and not the turnover.   For the past decade the industry average for an income multiple has been in the region of 1 – 1.25 x fees.  However in 2016, this multiple has gone down below 1, so the starting point for negotiating a deal would be at or below 1 x fees.

A buyer will consider each of the factors, as listed above, and if any of them individually or collectively are not seen by the buyer as being attractive it will affect the value of the practice. For example, Draper Hinks was involved in the sale of a practice in London where the vendor was aged 70+ and the clients were mostly in their late 60’s or early 70’s.  The buyer only offered 0.25 x fees.  This was deemed a fair offer by the buyer because of the reduction in the potential longevity of the client base.  In another situation the vendor sold their practice on the Friday and on the Monday they were living in Spain.  The buyer knew this was going to happen and because there was no handover the price paid was reduced by 35%.

One of the most important of the factors a buyer will take into account is perceived risk.  This could cover things such as a new competitor opening an office locally to the practice for sale, a change in legislation affecting the taxation of the proceeds of the sale, the staff that have client contact leaving and setting up in competition, etc.  Perceived risk is not shown in the accounts or on paper.  It is something that is not always apparent but can make the difference between a sale going through and not.

It is important when you are considering buying accountancy fees or selling an accountancy practice that you speak to a professional that can guide you through what needs to be taken into account.  If you want to know more about how to buy or sell an accountancy practice then contact Nicola Draper on 01788 816440 or email her at n.draper@draperhinks.co.uk.

Please remember everything discussed will be kept in the strictest of confidence.

Julia Leask is a “change enabler” and helps business owners to get the best returns from running their own businesses. She is a Chartered Management Accountant and trainer with over 25 years’ experience working for and with a broad range of sectors.  The last five years have been specifically dedicated to working with SMEs.  She has been invited by Nicola Draper to write a blog entry for the website and has submitted the following contribution:-

Have you got a to-do list that just seems to grow and grow?

Do you find yourself wishing there were 36 hours in every day?

Well don’t worry, you are not alone.  It is a typical problem for growing businesses and one that at first-sight seems incredibly difficult to overcome.

But help is at hand, and the good news is that it does not cost a lot of money to implement, but will make and save you money almost straight away.

I have put together 7 quick tips for working smarter and not harder to help you take back control of your day.

1. Give yourself time – The first thing to do is allow some time to manage the business. Take a bird’s eye view of what you are doing and make the changes that will pay dividends later.  It may be difficult to take a couple of hours out of the business but you have to be disciplined.  If you are always being interrupted, then go and sit in your local coffee shop and plan the changes that will transform your day.  Once you have done this, make it a regular date so that you can keep up the momentum.
2. Be ruthless – Take a look at all of the things you do and ask yourself the fundamental question “Why do we do that?” If the answer is because you have always done it that way – or even worse, you can’t think why you do it – then cut it out.  There is no benefit to doing work just for the sake of it.
3. Plan your work then work your plan – Too often we turn up to work and get pushed from pillar to post, and at the end of the day feel that nothing has been achieved. Studies show that the executives with a day plan get more tasks completed and do so quicker than those who have failed to organise their day.
4. Prioritise your plan – Make sure that you are doing important jobs rather than just the ones you like. Give each of your tasks a score out of ten based on how critical and urgent it is.  Do the tasks with the highest scores first and not the ones you enjoy doing.
5. Stop re-inventing the wheel – There are hundreds, if not thousands, of apps and software programs that will help you with your day. From things as simple as free expenses managers that will take a photo of a receipt and then automatically produce a report, to full-blown accounting software.  Have a look around at what is available, and consider investing a small amount to take away admin drudgery and give you back some of your valuable time.

6. Delegate – When you have built up your business it can be really difficult to let go, but if you never train and trust people then your business won’t be able to grow any more than the amount of time you personally have available. If you don’t have anyone working for you then ask family or friends for occasional help.  You may be surprised to find that people enjoy helping out.
7. Outsource – If you can get someone else to do a task that frees you up to concentrate on your core business, then it’s worth doing. A good example of this is bookkeeping, where a professional will be quicker and more accurate, and while they are poring over your books you can be out earning more money.

The best advice I can give is to remember that you are a business manager rather than just someone who works in a business.  Applying these tips will give you more capacity to actually run your business rather than have it run you!

I would like to thank Julia Leask for her contribution to our Blog.  If you want to know more about how to work smarter and not harder, then email Julia at julia@leaskas.co.uk or phone her on 01926 298829.

Draper Hinks works with accountants that want to sell or buy accountancy fees.  We are business brokers for accountants and deal with no other type of business, so if you are thinking of buying or selling an accountancy practice, then please contact us on 01788 816440 or email us at info@draperhinks.co.uk.

It is important when selling an accountancy practice to make it as appealing as possible to the buyer. You want to present it in the best possible light so that it is attractive to a buyer. This does not mean that you should spend thousands of pounds on redecorating your office or spend hours, days and weeks getting and implementing a new computer system. It means that you should present a well-managed, well run business.

If you were going to put your house on the market you would want it to look good to prospective buyers. An estate agent will come round and take photos of it looking its best.  There would be no point putting new carpets throughout in case they were not to the taste of the buyers and, if they pulled them up, that would be a waste of time effort and money.  Showing it off in the best light is what a buyer is looking for. The same goes when selling your accountancy practice.

I have spoken to several vendors who are looking to sell their accountancy practice and they have told me that they have a very profitable practice and are keen to find a buyer paying “top dollar”. When I looked into them, I found the vendors were working 70 or 80 hours a week. One poor chap told me he was working over 100 hours a week to keep up with the work load.

That accountant does not have a business; he has a job that is crushing him.  With that kind of pressure he was not able to see the wood for the trees and is rushing around in ever-decreasing circles with his health seriously impaired.  If he does not sell his accountancy practice the prognosis is not good, and yes, I did tell him that without frills. He needed to know. Unfortunately I have not heard from him since and I worry for his health.

Where a vendor is working 80+ hours a week, it is the equivalent of two full-time people.  The profitability of the accountancy may appear good on paper but this is only due to the fact that there is a lack of staff doing the work. A buyer will have to factor in the cost of finding a new full-time member of staff and so the profits will be reduced by their salary. This can have a significant impact on whether or not the accountancy practice is attractive to a buyer.

To find a new full-time member of staff is not that easy in today’s market. I am often told that there is a national shortage of good quality staff available on the market. In the case of the vendor working 80 hours per week, the buyer will have to have the resources to replace the vendor and at the same time find another member of staff.

Where an accountant works from home, the savings can be considerable.  I know some accountants that have passed on the savings to their clients and charge a much lower fee than their competitors.  However, this does not help when you want to sell your practice. If your fees are too low, it will put off the buyers.  If we are able to find a buyer for you then the buyer may have to put the fees up after completion and your clients may not be happy and could move. This is an unsatisfactory outcome for both parties.

We have sold accountancy practices where the vendor spent too much time with each client, offering them a cup of tea and piece of cake at each meeting.  This may be nice for the client but it is much more of a drop in centre than an accountancy practice.  We have been asked by vendors, who offer this “service”, to find a buyer that will do the same for their clients.  This is a difficult, if not impossible, brief to fill.  Most buyers run a business and will not sit and chat for too long with the new clients.  It can put buyers off.  My advice is to stop offering the cake. Just offer the cup of tea if you have to, but a drink of water would be better. Always talk business with your clients and keep the chit chat to a minimum. Educate your clients to expect that you have an accountancy business to run and not a charity. Doing this before you sell your practice will reap rewards with higher retention.

If you have not increased your fees for many years, it can put buyers off.  I do advocate that you increase them every year or at least every other year, even if it is only by a very small amount.  Buyers like to see that you have a commercial attitude to work and will respect that.

When starting out, many accountants will travel to see clients, but as they get busier this can be a burden. Educate your clients to pick up the phone, email or use the post. Travelling time can be seen by a buyer as wasted time.

Don’t be the only person seeing the clients. You can quickly become the bottleneck. I have heard of accountancy practices where the staff have little work to do because the boss in charge has a pile of files that has not been looked at. The more work delegated to staff, the better. The more the vendor is not needed in the practice the better. A buyer will be more interested in this type of practice than the one with the bottleneck.

Become VAT registered as soon as possible. Clients will be used to paying the VAT even if they are not themselves VAT registered.  Most buyers are VAT registered. If you are not VAT registered it can mean an immediate increase on the fees of 20% when the buyer takes them on.

There are many other factors to consider when selling your accountancy practice. If you would like to discuss any of the above or talk about your own situation then please email me at n.draper@draperhinks.co.uk quoting reference Blog 160729. I look forward to hearing from you.

At Draper Hinks we have been selling accountancy practices for well over a decade now and have successfully sold over 140 practices/tranches of fees.  We have been asked to sell all types of accountancy practices and it is our job to find a buyer for our vendors.  In theory, this sounds quite straightforward but it is often fraught with problems.  As the person in charge of running Draper Hinks it is my responsibility to manage the expectations of the seller, so that they are not disappointed with any offers made to them by buyers.

For many years, the industry average for an income multiple has been once times fees ie if you are selling £100,000 of accountancy fees you could expect to be paid £100,000 (with certain conditions applying, such as client retention etc).  I have often been told that to value a practice on the amount of fees being sold is a strange way to value an accountancy practice.  Most businesses are valued on the basis of a multiple of profit, which makes much greater sense.  I do not understand why this anomaly exists in the field of selling accountancy practices, but it does.

The marketplace this year has changed quite noticeably and there has been a significant downward pressure on income multiples being offered.  I have had to let vendors know that they may not be offered the historic 1 x fees.  We have had multiples being offered at 0.7, 0.75, 0.8, 0.9 and 0.95, where only last year we would have expected to be offered 1x fees or even more.  However, we still have had offers from buyers at the 1x fees and above, but it is becoming the exception rather than the rule.

Many vendors believe their accountancy practice is worth more than 1 x fees.  This is because they feel they offer a unique service, their practice has been growing by 10% pa or more, they have strong relationships with their clients, or they have are specialists in their marketplace etc.  If the vendor feels their accountancy practice is “better” than their competitors, they will be looking for a premium to be paid for it.  However, you have to go back to the old adage that anything is only worth what someone will pay for it.

As a broker – to be put in a situation where a buyer is offering lower than the amount expected or desired – it is not always possible to get the vendor to lower their expectation and accept what is being offered.  The vendor gets disappointed, disillusioned and feels let down with the offers being made.  This will often lead to them pulling out of negotiations, leaving all parties frustrated.

When discussing the sale of a practice, the greater the need for the vendor to sell the more likelihood that the deal will go through.  If we have a vendor that is thinking about selling because they are fed up and don’t enjoy their work anymore, they are less likely to accept an offer of less than 1 x fees.   However, if a vendor has to sell because they are not well and have a serious illness, then they will accept whatever is offered.  As a broker I have had to deal with the sale of accountancy practices where the vendor has had terminal cancer with three months to live, been diagnosed with a brain tumour, and been admitted to a nursing home following a bad fall that has brought on dementia and Parkinson’s.   In these situations, we have sold the accountancy practices based on what the business was worth, and not on the health condition of the vendor.

It is important that the vendor knows what they are going to do post-sale.  One vendor told me he would not sell his accountancy practice until the list of “things to do upon retirement”, that his wife had given him, was reduced to two sheets of paper instead of three.   Another vendor said he was putting off selling his accountancy fees because there were only so many times he could face going to Ikea.  Other vendors can’t wait to get away from the constant grind of having to hit deadlines, take on new government initiatives and keep up to date with constantly changing legislation.  We have been given many different reasons why someone wants to sell their accountancy fees.  All of them are valid.

Please remember that your accountancy business is not your retirement fund.  You have had an income from it while you have been working.  Yes, you may get something for it when you come to sell it, but buyers may not always be there when you want to sell.

Until now, we have always been able to find buyers for our vendors.  That has not been the case this year, however, the sole example being one small accountancy practice for sale on the south coast.  We found a buyer who showed a keen interest but did not show up to the meeting arranged with the vendor.   We confirmed the meeting on the Friday before the arranged time on the Tuesday, and he said he was keen to meet the vendor.  After he did not turn up, we tried calling him, emailing him, texting him, but we got no reply to any of our attempts to contact him.  Nothing. The vendor was not happy and neither were we.  The practice remains unsold.  We will try again to find a buyer in a few months when the marketplace may be different.

So buyers are offering lower amounts for the practices they are buying and there are fewer buyers looking to buy.  I have always said that it is a seller’s market.  For the first time in over a decade I have had to alter this mind-set.  However, it is not a buyer’s market either.  We do not have more sellers than buyers.  We still have many more buyers on our books, but many of them are only thinking about buying or finding out what is on the market, rather than actually completing deals.  We get a lot of interest in the practices we are looking to sell but not as many offers coming in.

I do not know why there has been this change in the marketplace.  Funding is plentiful and cheap.  Buyers want to expand their businesses.  Sellers want to retire or follow other career paths.  This year is an anomaly.  Let’s hope it all changes before the end of the year, as this trend only started early on in 2016.

Brexit has not helped either.  We have had a buyer pull out of a deal when it was close to completion, citing the fear of the future as the reason for not taking it further.  I don’t know what effect it will have in the long term, but the clients of accountancy practices will still need to have accountants and accountants will still want to retire or do other things.  There will always be a market for accountancy practices but at the moment multiples are depressed and committed buyers are no longer there in their droves.  I would welcome the feedback from anyone reading this blog who may be able to comment on the contents.

If you are thinking about selling your accountancy practice, or are thinking about buying an accountancy practice and want to discuss your own situation in confidence, please email me at n.draper@draperhinks.co.uk quoting reference Blog 160701.

I was contacted by a sole practitioner who wanted to sell his practice.  He had had enough of running his practice and wanted to find a buyer that would look after both his one member of staff and his clients, in that order.  After much research – looking at different brokers – he contacted Draper Hinks to sell his accountancy practice.

Draper Hinks went through the normal procedures and arranged a meeting day for the vendor to interview a number of buyers for suitability.  Of the six buyers he met at the meeting day, one stood out, an offer was made and accepted and both parties looked set to complete.  However, over a matter of months it became apparent that the buyer was procrastinating and so the vendor pulled out of the sale.  The vendor was very disappointed.

Draper Hinks was then requested to find another buyer.  We set up another meeting day for the vendor and three more buyers were found.  One of the buyers came across well, said the right things and the vendor agreed to sell to him.  The sale progressed to completion.  Throughout the process the vendor reinforced the need for the buyer to take care of his one member of staff who had been very loyal and had worked hard.  Completion took place and both parties were looking forward to the future.  The vendor even held a small retirement party for his clients to meet the new owner in a relaxed and informal setting.

On the first day post-completion, the employee handed in her notice to the new owner, saying she had had an offer from another accountancy firm and was going to work her one month’s notice and leave.  Neither the buyer nor the vendor knew anything of this and neither of them could persuade her to stay.  She also informed them that the firm she was going to work for had offered her a much higher salary because she told them she was able to bring clients with her.  The vendor did not realise how vulnerable he was because he had allowed his one member of staff to have significant client contact.  She left after a month.

The buyer was not happy because it looked like she had left because of something he had said or done, which was not the case.  It had all been pre-planned and pre-meditated by the employee prior to the deal going through. The vendor was very upset because his first priority was for his one member of staff to be fairly treated and well looked- after by the buyer. I can vouch for this because I attended all six initial meetings and heard him stress that to each potential purchaser.

It was then decided by both the buyer and seller to put that episode out of mind and concentrate on bedding in the clients to make them happy so that they would not leave.  It was here that the vendor was let down again, this time by the buyer.  At the meeting day the buyer had agreed that straight after completion he would get in touch with all the clients to introduce himself and let them know that he would be their point of contact.  He did not do this.  Four months later – yes I did say four months later – some of the clients had not been contacted by the buyer, so they left and found another accountant.

You can imagine that the vendor was not best pleased and it caused significant stress to him.  He had always run his practice on the premise that clients need to be kept informed at all times, reminded of deadlines etc. He ran a very proactive practice.  The buyer, on the other hand, felt that when the clients’ work was due to be done that was the time to contact them, even if that meant not being in touch with the client for many months.  The vendor had no way of knowing that this was how the buyer was going to react post sale until completion had taken place.  You can only take people on their word.  The buyer was a chartered accountant.

The vendor has described this time as like being on a rollercoaster. Very up and down, but also very stressful. As a result of all the stress the vendor suffered a heart attack six months after the deal had been completed.  He is not the first of our vendors to suffer in this way.  It shows how much he cared about his clients and his staff, and how much the sale of the practice meant to him.  I am pleased to say he has recovered from his heart attack and is looking forward to what the future is going to bring.

We do understand that selling an accountancy practice can be very emotional at the best of times but when things go wrong and people let you down, it can be incredibly stressful as well.  At Draper Hinks we sell a number of accountancy practices each year and offer a personal service throughout the process up to completion.

If you are thinking about selling your practice and want to discuss your situation in confidence please email me at n.draper@draperhinks.co.uk quoting reference Blog 160526

Several months ago I received a request from a chartered accountant who wanted to talk to me about selling his accountancy practice. We arranged to meet and he let me know he was going to be accompanied by his wife, who also worked in the practice. The purpose of the meeting was for me to answer any questions he had about the process of selling his fees, how much he would be paid from the sale, what his involvement would be post sale and what the time frame would be for the sale of his accountancy practice from start to finish. His wife was an active participant throughout the meeting.

 
It was not until the point that I asked his wife how she would cope if he were to become seriously incapacitated, that I realised she had been thinking about this scenario for a long time – years in fact – and it concerned her greatly. She was heavily involved in the running of the practice, they had no staff, her husband was the chartered accountant and had the specialist knowledge needed to do the work for the clients. If he was taken ill or even worse, died, then she would have been completely left out on a limb. She would not have been able to do the work herself and would not have known how to proceed. I gave her my business card and said that should she find herself in that position then she was to call me. Her husband and I were both surprised at how much she visibly relaxed – knowing she would not have to deal with that situation on her own.

 
I phoned her a couple of days ago to ask her some more questions about her reaction and this is what she said:-
“The work my husband does is very specialised. He has his own system but a lot of it is in his head. If he died I would muddle along, but I would not like it and I know the clients would not like it either – they would end up leaving to find another accountancy practice that could help them. When you said you would be there to help a weight fell off me. I knew I had someone to talk to”.

 
“Before the meeting I had no one to talk to. My husband said to phone the institute, but that did not make me feel any better. I now have the name of someone I feel I could talk to. I needed a person I could relate to – who knew how to deal with this situation. I have your business card by my bed. I have photocopied it and put it in all the relevant places. I have told the family about you. I did not know how much stress I was carrying until it was all gone.”

 
My question to anyone reading this blog is – Are you in the same position? Do you have a life partner involved in your practice that could not run the business if you were incapacitated for a long time? If you work in a multi–partner firm or have staff that you can rely on to carry forward your practice then you and your clients are a lower risk. However, you are most vulnerable if you work on your own with no staff and your life partner is not involved in the day to day running of the practice. Is it fair to leave them to deal with the sale of your practice without you there to guide and support?

I have experience of dealing with a widow whose husband died the night before she called me. I have experience of dealing with vendors who have had a heart attack, a stroke, a brain tumour and terminal cancer. In all of these scenarios it is important to deal with a broker who has empathy for the remaining life partner and has the experience to know how to deal with the situation especially since speed is of the essence.

If you would like to speak to me about your own situation then please remember everything discussed is totally confidential. You can email me at n.draper@draperhinks.co.uk – I look forward to being of assistance.

REASONS GIVEN BY VENDORS AS TO WHY THEY HAVE NOT SOLD THEIR PRACTICE.

Draper Hinks has been selling accountancy practices for many years and has had a lot of successful completions. The time taken to sell a practice will depend on many things but you can reduce it down to the following important factors:-
• Turnover of the practice.
• No of staff.
• Where the practice is located.
• Willingness of the vendor to let go of the practice.

It is often overlooked how emotional it can be for a vendor to sell their practice to someone they do not know. Most vendors invest a huge amount of time and effort to grow the business and then look after clients. I often hear from vendors that they have become friends with their clients. Some will go to the birthday parties, weddings and even funerals of their clients. They can be used as unofficial counsellors often learning more about their client than they expected or even wanted to know. Finding the right fit between buyer and seller is therefore very important.

Buyers come in every shape and size. Some are just starting out and want to get their first foot on the rung of the ladder and others are national firms buying many times a year. We deal with all of them. If a buyer has not bought before, we will help them as much as we can. If a buyer has bought many times before they often ask our advice as to how best to put in an offer to match the wishes of the vendor.

When the deal goes through without a hitch that is always good, but we often get obstacles and hurdles along the way that have to be overcome, like the recent deal that went through were the vendor had to make 92 yes I did say 92 adjustments to the contract sent to him by the buyer’s solicitor. He still managed to plough through to completion but he found it a bit of a strain at time.

Some deals do not complete for various reasons:-

Reason 1
The vendor had a meeting day. Met with a number of buyers. Had one offer. Accepted the offer – all was looking good and promising. Terms were agreed. Time frame was agreed for due diligence. Time frame was agreed for completion. The buyer invited the vendor to his office to meet his business partner. The vendor did not like him. The deal fell apart. The vendor has decided not to sell for the time being.

Reason 2
The vendor had a practice manager to help run the practice. The vendor met a number of buyers and had two offers on the table. The vendor went to the purchaser’s office and met with the other partners. All were keen to proceed. Terms were agreed and time frame was agreed. The purchasers wanted to interview all the staff pre-completion to ascertain competency of the staff. Meetings were arranged. The practice manager did not like the purchasers and threatened to leave taking clients with him. The deal dissolved.

Reason 3
We had a vendor who was in his mid 70’s. He had been in practice for a large number of years and his practice turnover was beginning to decline each year. One of his staff had decided she wanted to retire and so gave notice. The vendor was not happy to accept the notice and did nothing to replace the full time qualified member of staff. She left. He then approached us to find a buyer saying he could not cope with the workload and things were about to fall apart if we did not find a buyer asap. We found three buyers. All of them put in an offer, but because the average age of the clients was over 70, the average fee was well below market rate and the portability of the clients was low, the two offers we got were less that 50p in the pound. The vendor did not sell and so the practice kept dwindling to the point all the clients had left.

Reason 4
We dealt with a vendor that wanted to do other things with her time. She did not want to run an accountancy practice full time. She asked us to market her practice and we found some buyers for her to interview. She had a couple of offers. One of the offers was accepted. The buyer took on a new member of staff to deal with the extra work load following completion of the deal. The vendor then found a practice manager to run the practice in her absence – agreeing to work one day a week. The vendor then pulled out of the sale and the buyer was left with a hefty recruitment bill from an agency for a member of staff he no longer needed.

Draper Hinks only deals with the buying and selling of accountancy practices. It has been doing this for over a decade and is very successful in what it does and how it does it. If you are thinking of selling your accountancy practice then contact Nicola Draper at Draper Hinks at n.draper@draperhinks.co.uk she would be happy to discuss your situation in complete confidence.