All posts by Nicola Draper


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 – I look forward to being of assistance.

Why haven’t you sold your 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 she would be happy to discuss your situation in complete confidence.

Why a Meeting Day is Important

What happens at a Meeting Day.

At Draper Hinks when we are asked to sell an accountancy practice for a vendor we find out from them where we should be looking for a suitable buyer. This would normally involve some kind of geographical search around their existing office/s. Once we have identified the area we contact suitable purchasers to find out if they are interested in buying the accountancy practice we are selling. On our database at any one time we can have in excess of 900 registered buyers throughout the country.

We ask all buyers to sign our Letter of Engagement that includes a confidentiality clause stating that all information we given to them by Draper Hinks is confidential. Once the signed paperwork has been returned, report of the accountancy practice for sale is sent out. This includes information such as details of what accountancy systems are used, how they charge for their time, information about clients (without names), staff, premises, PII claims, details of any fee protection cover they may have etc etc.

Once the buyer has read the report, if they are interested in meeting with the vendor, they will let us know. We will have allocated a day for the meetings to take place where the vendor will have booked a venue. The meeting day gives the vendor the opportunity to interview a number of potential buyers. Sometimes the meeting days are over subscribed and we have a waiting list. If the accountancy practice for sale is large ie there are several staff members, an office as well as a client base, then we would normally allow an hour and a half per meeting. If we are selling an accountancy practice for a sole trader with no office and no staff then the meetings will be booked in for an hour each.

Each buyer is asked if they have bought before, if they have funding in place and what their turnover is. If they have bought before, they will have relevant experience the vendor can ask about. Funding is important because if the buyer has to arrange funds through a bank then it can take months for that to come through. Turnover is important because a buyer will need to have turnover at least as large as the vendor’s. We have had an instance where someone approached us to buy a practice with fees in the region of £150,000 where his turnover was £10,000 and he was still in a full time job with a notice period of six months. Needless to say we did not book an appointment for the buyer to see the vendor .

At the meeting day the potential buyers of the accountancy practice are given the opportunity to ask any questions of the vendor that they want (within reason). Often Nicola Draper will be asked to attend the meeting day by the vendor. She will chair the meetings, take notes and make sure all areas that need to be covered in the meeting are covered. Sometimes she has had to cut meetings short where there has been a falling out between seller and buyer. In one instance, a buyer attended a meeting day and told the vendor that she had been unprofessional in how she ran her business and had given wrong advice to her clients. Nicola stepped in and stopped the meeting early. In another case the buyer forgot the name of the vendor and kept calling him Malcolm when his name was Simon – that did not help. Nicola prompted the buyer and said that vendors name was Simon but the buyer forgot again. Needless to say in both of the above examples the buyers were unsuccessful in taking things further.

At each meeting the vendor gives some background about themselves, how they started their business, how they built it and why they want to sell. The buyer is then asked to give some background about how they started their business, built it and why they are looking to buy. Why a buyer is looking to buy is probably the most important question that gets asked in the whole of the meeting. It can set how the meeting runs. For example, Nicola attended a meeting day in Bristol and the buyer was asked why he wanted to buy the practice. His answer was because he kept losing clients and so he needed to buy some more very quickly, to replace the ones he had lost. That was another meeting that was cut short.

At the meeting, the buyer of the accountancy practice is given an outline of what the vendor is looking for in the way of a deal ie how the money is to be paid, in what tranches over what period of time, or if a one off fee at a discount is being sought, or an earn out over a number of years. The income multiple will be discussed. A time frame will be given for the closing date for indicative offers (which are subject to due diligence) and when the deal is envisaged to be completed.

Having a meeting day is good for vendors because:-
• They can meet several buyers on the same day. They can compare like for like.
• Nicola will prep them on how to get the most out of each meeting whether she attends the meetings or not.
• The vendor will get a good understanding of what the buyer is looking for.
• They can look for someone that will “fit” with their clients and their staff.
• They do not have to accept the first offer they get and they know they are getting full market rate for their practice.
• They have access to Nicola’s extensive experience.
• A vendors of a smaller practices are not intimidated by a larger firms

Having a meeting day is good for buyers because:-
• They get the opportunity to meet with the vendor and ask any questions they want about the practice for sale.
• They know at the end of the meeting what the vendor is looking for, how the deal is to be structures, when the closing date is for indicative offers and when the completion date is set.
• All buyers have access to Nicola’s extensive experience.
• The process is professionally handled and is managed in a timely manner.

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 she would be happy to discuss your situation in complete confidence.


Selling An Accountancy Business ConfidentialThe importance of keeping everything confidential when selling your accountancy practice

It normally takes some time for a vendor to decide to sell their practice. It is not unusual for us to start to talk to a vendor 2 – 3 years before being asked to find a buyer. I often meet vendors away from their office to discuss the way in which a practice is sold, what the market conditions are like and what income multiple can be expected from the sale. Having this meeting offsite means the vendor can discuss their situation in confidence knowing the staff will not hear what is being discussed.

I did meet a vendor who had been advised by another broker to tell his staff and his clients he was thinking of retiring. He said it was the worst advice he had ever been given. The staff were up in arms and wanted to know where they stood and what was going to happen about their jobs. The clients were upset and many of them left to find other accountants. The vendor had not yet met any buyers and had not yet made his mind up when he was going to retire, he was just thinking about it.

One of the fundamental needs we have in society is to know where our income is going to come from. If our basic security is threatened then there can be significant repercussions. By telling the staff that he was thinking of retiring, without being able to say who was going to take over, when it was going to happen and if their jobs were secure, left all the staff feeling insecure and unhappy. The vendor had to work very hard to tell them that they were needed, valued and vital to the ongoing success of the firm. This was not a small practice, it had turnover well in excess of £750k but the principle is the same whatever size practice you have.

The clients also felt threatened not knowing who was going to be looking after their affairs. The vendor had worked with some of these clients for in excess of 20 years, even 30 years in a few cases. There is little or no loyalty from clients if they feel their accountant is about to stop working and many of the clients left and found other accountancy firms. The clients needed to know that their accountant could do the wages, VAT, management accounts, statutory accounts etc.   The vendor was wrongly advised by the broker in the first place.

Yes, we do come across the occasional practice where the staff and clients know that the vendor is retiring. In one case, the vendor had been diagnosed with terminal cancer and only had three months to live. In another case, there was a two partner firm and one of the partners had a brain tumour.   Staff and clients were very understanding in both of these cases and the loyalty factor was very high.   We were able to find a buyer in both instances and the deal went through very quickly.

On going communication is also a factor when selling an accountancy practice. Once we have been given an instruction to find a buyer then we need to communicate with the vendor. One vendor asked me to text his girlfriend to tell her that I had emailed him on his home email address so that he knew when to open his emails. Another vendor only allowed me to email him between 5pm and 6pm each day and I had to email him to ask if was ok to email him. It was not uncommon for me to get an email back from him saying “no”. He would then instruct me as to when I could email him ie between 10.17 and 10.29 the following day. This made for extremely difficult communication between the two of us and I could never guarantee to be available to email him when he was free.

We do understand the need to keep everything confidential, but sometimes it is very difficult to keep vendors informed of progress when they do not make themselves available. If you want to talk about this, or any other matter please email me at quoting reference Blog 150507

We are business brokers for accountants and deal with no other types of business, so if you are thinking of selling your accountancy practice, then please contact us on 01788 816440

Selling a business has many financial implications


Nicola Draper has invited a number of people to contribute to the Blog on the Draper Hinks website.  Marc Ovits is a financial adviser with several advanced qualifications and many years experience in the industry.  He has submitted the following:-

Selling a business has many financial implications

Selling your business may well be the biggest financial transaction of your life. You will naturally want to maximise your return on sale and a key part of this will be trying to minimise the tax you need to pay. However you also need to consider life after the transaction. For example, how much income will you need in retirement? This article provides an over view of the sorts of issues you should consider when selling a business.

The general structure of a business sale deal
If you are selling only part of a business, you’ll need to consider whether to structure the sale as a transfer of assets or of shares. Special corporation tax treatment applies if a trading company sells shares in another trading company in which it holds a substantial shareholding.

In some business sales, the deal will comprise of cash and/or shares up-front plus a percentage of the deal will be based on the future performance of the business (an “earn-out”). This earn-out provides the buyer with the security that they are getting what you say they are getting in terms of a profitable business.

When you are negotiating a business sale, it is natural to focus on the price you can sell the business for (gross proceeds). However, gross proceeds are only important up to a point. More important is the cash that you actually receive (net proceeds) and in this regard, the biggest impact on the net proceeds will be the amount of tax you need to pay.

A brief overview of the different taxes that may apply

Entrepreneurs’ relief

Entrepreneurs’ relief can allow you to pay a lower rate of capital gains tax (CGT) when you sell your shares in your business. If Entrepreneurs’ relief applies, the rate of CGT is reduced to 10% (as opposed to 18% or 28%). Individuals have a lifetime limit of £10 million of gains for which Entrepreneurs’ relief can be claimed.

Entrepreneurs’ relief can apply to sales of unincorporated businesses or personal trading companies — provided qualifying conditions are met. Given the substantial tax savings involved, it is vital that you organise your business and its sale so that you qualify for Entrepreneurs’ relief.

Other CGT reliefs

Roll-over relief allows CGT to be deferred if the gains are reinvested in new business assets. Provided roll-over relief applies, CGT will only become payable when these new assets are sold.

Hold-over relief can be used to defer CGT if you are giving away your business rather than selling it — for example, handing your business on to your children. CGT is generally automatically deferred on any transfer of assets to your spouse or civil partner.

If you need to incorporate your business as part of the sale process — for example, if you are going to float on AIM or the Main Market of the London Stock Exchange — any capital gains made at the time of forming the company will normally be deferred automatically by incorporation relief. You become liable for CGT when you sell your shares.

Have you thought about the future?

As is evident from the above, maximising your net sale proceeds is usually best done by planning in advance with the assistance of some advice from a tax professional.

Yet the price you receive is only one part of the equation. There are other considerations. How will your sale proceeds be taxed on sale and beyond? How much income will you need in retirement? For these aspects of the transaction, you are likely to benefit from taking advice from a financial adviser. A competent financial adviser will bring a holistic perspective to your current circumstances. In other words, they will help you to consider the wider implications of your transaction. A good example of such planning is the following.

Many trading businesses qualify for Business Property Relief. Business Property Relief (BPR) provides relief from Inheritance Tax (IHT) on the transfer of relevant business assets at a rate of 50% or 100%. This applies to a business or an interest in a business. Relevant property must be held for at least two years in order to qualify for relief. If you sell your business for cash and that cash goes into your estate as opposed to re-investing it in another asset that qualifies for Business Property Relief, your beneficiaries’ potential inheritance tax liability can rise in an instant. Remember that Inheritance tax is charged at a rate of 40% above the nil rate band (currently £325,000 2015/16).

Determinants of Tax Charge

The tax treatment of the proceeds depends on precisely what is being sold, by whom it is being sold and the form of consideration to be received.  The first step in tax planning is therefore to identify these components of the transaction.  The following points give a brief taster of some of the tax considerations arising on a business sale:

• If the business is trading through a company, is the company to be sold (in which case the shareholders will be making the disposal) or will the company sell the business (in which case the company will make the disposal and the shareholders will then need to consider how best to extract the proceeds from the company)?

• If the proceeds will be paid in cash over a period of time, the gain may nevertheless be taxed immediately on sale, which could present a significant cash-flow problem if the balance of proceeds is skewed towards the future.

• The immediate gain may be deferred if the proceeds are received in shares or loan notes, however entrepreneurs’ relief (which give a 10% rate of tax rather than a 28% rate) may not be available on these elements of the proceeds.

• VAT may need to be charged on the sale of assets.  Failure to do so will generally result in the proceeds being treated as received gross of VAT, from which you would need to account for the VAT (possibly without the ability to recover it from the buyer).

• If part of the proceeds is conditional on your employment, it is possible that it will be regarded as employment income rather than a capital gain (with the consequent rates of income tax of up to 45%, plus national insurance).

• If the business uses assets owned personally by the vendor, such as the premises, the sale of those premises may or may not qualify for entrepreneurs’ relief depending on when and to whom they are sold and also the level of rent which has been charged.
There are many aspects to consider when a selling a business. It is therefore important that you give yourself adequate time to consider the options, so that you can evaluate which options will help you achieve your objectives. The benefits of having trusted advisers to help you navigate your way through the minefield that is selling a business cannot be overstated.

I would like to thank Marc Ovits, for his contribution to my Blog.  Marc has over twenty year’s financial services experience including eleven years of investment banking experience. He is a qualified financial adviser with several advanced qualifications in Financial, Investment and Retirement planning.  If Marc’s email address is    If you would like to contact him.  Please mention that you got his details from the Draper Hinks blog.  If you would like to contact me at Draper Hinks my email address is

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

We had a buyer who thought he could not afford to buy a practice we were selling

Buying accountancy practice

We had two instances last year where buyers thought that they could not afford to buy a practice we were selling. One practice was in the Midlands and had fees in the region of £200,000. The other practice was in the North East, north of Newcastle upon Tyne and had fees in the region of £185,000.

In the first instance the practice being sold was a two partner practice but one of the partners had fallen ill and had been in hospital for several months. The remaining partner was bearing the brunt of the work load and was working six and a half days a week, 12 – 14 hour days. We all know this is unsustainable. Draper Hinks was contacted and asked to find a buyer as a matter of urgency. A meeting day was set up and the vendor met with three seriously interested buyers. One of the buyers pulled out because they thought it was not right for them. One of the buyers put in a good offer and showed proof of funding. The third buyer said they were keen to buy but could not commit to making three tranche payments for the practice. The vendor wanted to have 50% paid on completion, 25% paid after 12 months and 25% paid after 24 months.

The purchaser was about to pull out from the purchase until Nicola Draper spoke to him to say there was another way to buy a practice and that was on an earn out basis. That is where the purchaser does not make a payment on completion and pays the vendor from monies received. When the work has been done for the client, it has been invoiced and the client pays then a percentage of the money received is paid to the vendor. This agreement usually lasts for a longer period of time and is very popular with buyers. There is no borrowing on the part of the buyer so there minimal financial risk. If the work is not done it is not invoiced so there is no clawback. From the vendors point of view it can be quite advantageous because if the buyer increases the fee by offering other services then the vendor gets a share of the increase in fee.

The buyer was very happy with this solution. They put in an offer to the vendor (via Nicola at Draper Hinks) and the offer was accepted. Without the intervention of Nicola then this deal would have fallen through.

The other practice in the North East was on the market because the vendor wanted to retire. The buyer had just bought a practice and his money was tied up with that purchase. The buyer knew he could not afford to borrow any more money from the bank. Nicola suggested that he pay for the purchase through an earn out, which the buyer had not heard of, and he put in an offer that was subsequently accepted.

There are many different ways to structure the payments for buying a practice. It is always best to talk to someone who has knowledge of how to structure a deal.

If you want to talk about this, or any other matter please email me at quoting reference Blog 150301

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



Draper Hinks was first contacted by a vendor three years before he decided to sell his practice.  He was looking to retire because of health problems.  His fees were under £30,000, there was no office and no staff – so were fully portable and could be moved to the buyer’s office.  So far so good, what could go wrong…..

A meeting day was set up and the vendor met with five potential purchasers.  Three buyers made offers and one was accepted.  Completion was due at the end of November.  In view of the time of year, the vendor promised to be available for a hand over.  The vendor wanted a quick sale because he was moving to a new part of the country within 7 weeks of completion.

The buyer had not bought before. The first impression the buyer had of the vendor was that he was a lovely chap and everything done was in the best interest of the clients.  He did mention that he had been ill and the practice was in a bit of a state.  The buyer appreciated the honesty and she thought “How bad could it be”?  She was soon to find out.

In order that everything could be dealt with in time before Christmas and the tax return deadline, the purchaser worked hard to get a schedule of what work needed to be done by when.  She was dealing with her own busy practice.  All her staff were informed of the purchase and procedures were put in place to cope with the extra work.

The vendor then announced that the sale of his property had been moved forward and he was going to be moving before Christmas instead of at the end of January.  This meant the deal was to be done in three weeks instead of eight. The vendor was going to be moving to a  remote part of the country, where there was not going to be any internet access for weeks, there was no land line and only intermittent mobile phone coverage.  The purchaser was assured that all information would be given well in time and all files would be handed over intact.

Due diligence was delayed because the vendor cancelled meetings. The vendor was under pressure to get his house packed up.  The purchaser had to push hard to get the vendor to arrange meetings with clients.  There was little in the way of information given other than name of client and name of business.  Due diligence just did not happen.  She turned up with a van and three members of staff to move files but little had been done about getting files ready for the purchaser to pick up.

It transpired that the original client list did not match up to the client files taken away.  There were three files for the same person and no files for others.  She would find a file and not know who the client was and could not ask the vendor because he had moved house and could not be contacted.  She did not know which clients had had their tax returns done, which still had work to do or even which ones had moved away from the practice.  When she did manage to speak to the vendor he admitted the removers had packed the computer into the wrong container and it was in storage so there was no way he could check anything and none of the client information could be transferred electronically.

Before the move, the purchaser got the vendor to write a letter explaining that he was retiring and that she was going to take over the practice.  She then printed off all his letters for him.  She wrote her own letter of introduction and put both letters in the same envelope and sent them to the clients.  The response to the letters was fairly positive though some clients had already left, so she did not have a chance to speak to them and introduce herself.  Some clients did not have a letter because they were not on the list.  Most people were spoken to.

She had a phone call from a client saying his last two VAT returns had not been filed, neither had his last two CIS returns and so he had been given a fine.  Another client said he had been fined £3,000 for not submitting his accounts.  Yet another client had been fined £4,000 for late submission of tax returns. This last client had been assured by the vendor he was resolving matters with HMRC. The purchaser said there was a file full of letters and emails from the client asking what was happening and why were things not done.  The vendor had said he was dealing with everything but he obviously was not.

All the clients the buyer has spoken to are grateful to have someone who is proactively looking after their affairs.  It is very unusual for a buyer to buy a practice without being able to do due diligence, with little or no access to the vendor, not to have a full client listing, not to be aware of what work has been done and what work is still to be done.

I was present at the meeting day and there was no way of knowing that the practice for sale was in such a bad state.  I put forward a proposed deal to both the vendor and the purchaser that was a combination of tranche payment and earn out.  This was to give the vendor a lump sum and to protect the buyer in case she was inheriting a mismanaged practice.  She has since been in touch and would like to buy more fees, so her experience has not put her off.

If you want to talk about this, or any other matter please email me at – quoting reference Blog 150210

We had a vendor that died prior to completing the deal to sell his practice

Draper Hinks was contacted 18 months ago by a potential vendor who wanted to understand how the process worked for selling his practice.  He was a sole practitioner with staff and was thinking about retiring at some point in the near future.  He was concerned for his staff and his clients and wanted to find a good home for both of them.

It is quite common for us to find a vendor who will put the needs of the staff first, the needs of the clients second and their own needs third.  Many vendors have worked with their staff for a long time and seen them through good and bad times.  Where loyalty is shown by the staff the vendor feels a responsibility to them to find a buyer that will have their best interests in mind.  The same goes for the clients.  Some accountants consider their clients to be their friends.  We are often told that the vendor has been asked to attend weddings, funerals, graduations etc of clients, so the relationship with the client can be a very strong bond.

Often the price paid for the practice is the third on the list of things for the vendor to consider, after staff and clients.  So when we sell a practice we look for the best “fit” between vendor and buyer.  This means we look to have a number of buyers for the vendor to meet.  In this case the vendor contacted us 18 months ago and we were able to let him know how the process worked.  He left it for a year before coming back to us to say he was ready to take the next step.

We found him six potential buyers for him to meet and interview on a one on one basis.  We got him four good offers.  He had second and third meetings with some of the buyers before making up his mind which offer he would accept.  We let the successful buyer know and another meeting was held.  Heads of Terms were agreed and the time frame for due diligence and completion was laid down.  Then out of the blue the vendor had a stroke and died.  Nothing had been signed.  The deal was agreed on the basis that the vendor was going to be able to do a handover, which was obviously not going to be the case.  The buyer pulled out of the sale, the widow contacted a local firm and sold – at a knock down price.

Draper Hinks was not contacted by the widow. We had a number of buyers keen to buy.  We would have held her hand through the process, making sure the deal was done quickly and all parties were happy.  This did not need to happen.  If you want to talk about this, or any other matter please email me at quoting reference Blog 150109

The age of your client base can affect whether or not you can sell your practice.

It is commonly accepted that where a practice is being run by a sole practitioner, the majority of the clients will reflect the age of the practitioner. This can also be true of a larger practice where there are two or even three partners that are of a similar age. We are finding that the average age of our vendor is increasing year on year. It is not unusual for us to be working with sole practitioners in their mid seventies.

When we sell a practice we ask the vendor to give us a breakdown of their top 20 clients by fees charged in the previous year. We also ask for the ages of the clients and how long the vendor has been acting for these top 20 clients. A buyer is looking for a good retention of clients post sale. If some of the clients are very elderly, this can mean that the buyer is unwilling to pay money for them. The buyer will look at how long the client will remain with their accountancy firm post sale and it can mean the difference between a low offer being made and no offer being made.

If a vendor can show that there is succession within the client’s business, then this will help secure a good price for the practice being sold. We recently sold a practice and the purchaser was interviewed by the clients with the highest fee. They wanted to know that the purchaser was not a fly by night because they wanted to forge a good working relationship with the new owner, like the one they had had with the vendors. The clients were brothers running a property portfolio with a large number of properties rented out. The purchaser phoned me to let me know that he had been interviewed by these brothers only to find out that they were both aged over ninety. They had no intention of giving up work and so age can be deceptive.

However, when we are asked to sell a practice, the age of the clients is very important. Some buyers will back off and not even meet with a vendor, if the ages of the clients is high. We have had offers this year in the region of 0.3x fees because of the age of the client base. You cannot assume that just because you have a loyal client base that there will be a buyer out there that would like to pay for your practice.

If you want to talk about this, or any other matter please email me at quoting reference Blog 141008


I was recently contacted by a vendor who wanted to sell his practice.  He had fees in the region of £150,000.  He was a sole practitioner and had two full time members of staff.  He said he had already met two buyers and had two offers on the table and did not know what to do.  I discussed the two offers with him and we finished the conversation.

Less than a week later he came back to me and said that he would like me to find him another buyer because he did not like either of the two offers he had had. He then told me that he was not well and had only three and a half months left to live.  Well that soon changed the priority of finding a buyer for this vendor.

I would normally expect to take between three and four months from start to finish when selling a practice of this size.  In this case we were able to move aside all other work to deal with this as a priority.  The vendor was looking for a one off payment with no clawback but was prepared to give a significant discount on the purchase price.  Within three days I had interviewed four potential purchasers and had two offers on the table with proof of funding.  I selected one of the buyers for the vendor to meet.

With hospital appointments and chemotherapy about to start, there was not a lot of time for due diligence to take place.  I helped the buyer by making sure as many of his questions were answered as quickly as possible.  I helped the vendor by selecting the purchaser for him.

The outcome was that the deal took two weeks to complete.  The vendor was delighted and the buyer wrote a letter and I quote “I am most grateful for your assistance and support in the acquisition process and consider your overall level of service to have been excellent”.  Our brokerage fee was paid well within the payment terms and everyone involved was happy.

I have since had a call from the vendor to say that he is responding well to treatment and has a light at the end of the tunnel – which he did not have when we first spoke.  Let us hope his future is bright.

If you want to talk about this, or any other matter please email me at quoting reference Blog 140805