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Vicky Boulton runs her own marketing consultancy and has been invited by Nicola Draper to write a blog for the website. Vicky has done work for Draper Hinks and has helped to bring in a substantial amount of new business. She has submitted the following contribution:-

If you want to sell your accountancy practice within the next 2- 3 years, then the only realistic way to guarantee you will get paid more for your practice is to increase the amount of fees that you are going to sell. Most practices grow by word of mouth and personal recommendation. Organic growth is ideal but if you want to increase your fees significantly within a short space of time, then you need a comprehensive marketing strategy to do this.
Stand out from the crowd
Accountancy firms today face a more complex and crowded marketplace than ever before. The combination of increased competition, commoditised services, and more demanding clients has placed new strains on your industry. But perhaps the biggest stumbling block to increasing accountancy fees is the fact that essentially all accountancy firms provide the same thing, so looking for areas of differentiation via service delivery and/or offering niche services can often be the only way to stand out from the crowd.
Financial solutions
Because accountancy is about developing long-term rewarding relationships and building trust, your marketing efforts need to be focused on clients, their needs and lifestyles and of course the benefits that they will get. Remember, what you are really selling is two-fold.
1. financial solutions (factual)
2. peace of mind (emotional)

So it’s essential to get your clients and prospective clients to acknowledge that you will be able to listen, understand and help them towards achieving peace of mine by accessing your bespoke financial solution.
Become more profitable
Like any marketing, this whole process takes time, effort and resources – unfortunately there are no guaranteed promises of new business from day one. Marketing isn’t a quick fix, but done right, it can be a very profitable way to grow your fees.
By clever use of the following, you will be able to build your business successfully, whilst at the same time become known for delivering a valuable and trusted service that is easy to refer.
• Planning
• Targeting
• Regular communications
• Message consistency
• Engaging content
• Utilisation of multiple channels i.e. direct mail, emarketing, telesales, advertising, PR and networking

I would like to thank Vicky Boulton for her contribution to our Blog. If you want to know more about how to successfully market your practice so that you can increase your fees, contact Vicky Boulton at Fuel Marketing on 07766 566690 or email vicky@fuelmarketing

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



Nicola Draper of Draper Hinks has sold well over 130 accountancy practices, so has come across some interesting reasons why a vendor wants to sell their accountancy practice.  These reasons are not listed in any specific order.

Reason No 1 – Retirement

The most common reason given for selling an accountancy practice is where the vendor wants to retire.  They have got to a point where they say “it is not the profession I joined, it has changed so much since when I first started” or “I can’t be doing with compliance any more” or “With RTI and now auto enrolment, what will the next thing be?”  The one thing that is a constant with accountancy is that it is always changing, yes this sounds like an oxymoron but it is very true.

I spoke to one potential vendor who said to me recently “I need to sell soon because my heart is not in it any more and I want to sell before my clients start to suspect that I do not enjoy it and leave.”  He had seen the problem and was tackling it by setting in motion the sale of his accountancy practice.

Reason No 2 – Ill health

It could be argued that some vendors leave it too late to sell their accountancy practice, especially when they are prompted to do so by the onset of ill health.  Ill health can range from a slight incapacity where a vendor says “I would like to sell my accountancy practice because I am getting too tired at the end of the working day” to a case last year where a vendor phoned and asked if we could sell his accountancy practice because he “had only three months left to live” having been diagnosed with a very virulent form of cancer that was terminal and had spread throughout his body.

We have sold accountancy practices for vendors that have had heart attacks – in one case the vendor phoned to say “I have to sell my practice because my doctor says if I don’t I will die.”  He had had a heart attack and the doctor was worried about his stress levels.  The vendor had been saying he would take it easy, but left it too long and then had to sell due to circumstances.

We have sold accountancy practices for vendors that have had strokes and not been able to get to the office and work. One vendor had MS and had to have a member of staff help him up the stairs to his first floor office by placing his feet on each stair and guiding him up to his office.  Another vendor contacted us and he said he had breast cancer and he needed to sell quickly, another had a brain tumour and so the list goes on.  We can never be sure how long we will be healthy for but one thing we do know, we stop taking it for granted when we don’t have it any more.

Reason No 3 – Bereavement

I had a phone call one Tuesday morning and was asked if I could sell an accountancy practice.  The lady on the other end of the phone was totally focussed, easy to understand and to the point.  She said that she worked in the practice on a part time basis but it was her husband that ran the office, looked after the clients and all the staff. I asked if I could speak to him and she said that would not be possible because he had died in the night.  She told me she was in shock so was still able to deal with things on a totally logical and rational basis. We dealt with this situation as a matter of urgency and managed to get a suitable buyer for the accountancy practice and complete the deal in a very short space in time.  Both parties were very pleased with the result.

Reason No 4 – To do other things

It is not uncommon to come across a vendor that wants to sell their accountancy practice to follow another business interest or further training.  One vendor left and set up his own marketing firm that works with accountants helping them to be more effective and efficient and his business is now international, about to go global – so he is going from strength to strength.

Another vendor sold his accountancy practice to do an MBA.  He was a sole practitioner and grew his practice from a standing still with no clients to a turnover of over £350k in five years and felt he wanted to have another but different challenge.  Another vendor sold to become a horticulturalist.

Reason 5 – Move away

We have had a number of vendors that have sold up to move away.  Some have moved to places within the UK others have moved abroad.  One vendor moved from Bath to just north of Inverness, within in a week of selling his practice, where there was no mobile phone signal and limited broad band availability.  This made it nearly impossible for the purchaser of the accountancy practice to have any follow up hand over from the vendor post completion.

Another vendor moved to Bulgaria post sale and was rather economical with the truth when it came to saying what clients she was actually selling.  The buyer was not happy that the clients that were supposed to be on the list did not actually exist. Yes, due diligence was carried out, but the vendor carefully chose which client files the buyer of her accountancy practice could look at.  It is called due diligence for a reason – caveat emptor.

Reason No 6 – Split up of the partnership

It is not uncommon for partners in a partnership to have a falling out necessitating the sale of a practice. The problem then is who “owns” which clients.  If one of the partners runs the office and one partner brings in the business then coming up with a mutually acceptable way forward when selling the practice can be fraught with difficulties.  This is why it is very helpful to have a third party broker working with both parties.

Reason No 7 – Divorce

The two parties do not have to both be involved in the practice for the practice to be sold due to a divorce.  Often the side involved in running the practice will want the practice to be valued so that it can be taken into account when the assets are valued.  We worked with one vendor who was instructed by a judge in the divorce court to sell the practice, despite it being the only form of income for the vendor who was breadwinner in the marriage and he had dependent children living with him.  Cases like these can be quite emotional – especially where the vendor does not want to sell but is forced to by their soon to be ex.

Reason No 8 – Inability to do the work

There are two sides to this – one is where the vendor has been very successful and has grown the accountancy practice to a point they can no longer manage the size of the practice. One vendor was proud of the fact that he was always available to take the calls of his clients day and night. This was fine when his practice was very small but as it grew he was getting calls from 6am to 10pm 7 days a week.  This was unsustainable and not good for his health. Hence the sale.

Another case is where we had a vendor who started life as a bookkeeper and progressed to running an accountancy practice.  She was outside her comfort zone, was not capable of doing the work and was sinking in a sea of compliance.  Despite employing a chartered accountant to help on a day to day basis, the level of competency of the work was found to be severely lacking.  We found a buyer that took on the practice and they said there were some very good quality clients.  The amount paid for the practice was reduced quite considerably due to the poor quality of the work done by the vendor.

Reason No 9 – The most bizarre

We have had a few strange reasons for selling accountancy practices. One vendor was aged 63 and did not have a gap year after university so he decided he would buy a camper van and travel through all the countries in Europe for 18 months before deciding what he wanted to do.  One vendor wanted to sell his practice in order to become a chess Grand Master in Poland.  However, I think the most bizarre reason for the sale of an accountancy practice was the vendor in Kent who wanted to move the West Midlands to become an exorcist!  We meet all sorts when helping people to buy and sell accountancy practices.

If you want to talk about this, or any other matter please email me at quoting reference Blog 150805











Nicola Draper has invited a number of people to contribute to the Blog on the Draper Hinks website.  This contribution is from a solicitor based in a practice in Leicestershire.


A contract of sale will outline how much the purchase price is for the accountancy practice, when it will be paid and by what means. Usually, the purchase price for the fees for sale is agreed in a set of heads of terms and it could be a lump sum on completion but, often, there will be a deferred consideration clause with claw back provisions. These are designed to protect the potential buyer in the event the accountancy practice loses a particular amount of clients within an agreed time period from completion. These need to be carefully negotiated by the seller. The clause should go on to specify the details of any instalments and the dates they will be paid.



It is important to build in a confidentiality clause, as the information the potential buyer of the accountancy practice will come across throughout the course of its due diligence can be of a sensitive nature. It is imperative that the potential buyer (and his employees) do not disclose, or utilise, any information obtained throughout the transaction, other than for the purpose of assessing whether or not to proceed.



The position with employees also needs outlining carefully and specific employment advice will need to be taken so that the seller can be sure they are complying with the TUPE Regulations.


Client base

Accountants generally have a large database of clients. The seller of the accountancy practice can include provisions in the contract controlling how the client base is handled after completion. Selling an accountancy practice is very personal and it is important the reputation and goodwill of the business is protected, even after the sale. Both the seller of the accountancy practice and the potential buyer of the accountancy practice may want to build in an agreed handover period, so the transition takes place as smoothly as possible, limiting the disruption for clients.


Limitation on claims

Generally, these types of agreements contain various warranties. Warranties are contractual promises made by the seller of the accountancy practice about the state of the business at the date of completion and any breach of these could give rise to a claim for breach of contract. Limiting the claims reduces the seller’s exposure moving forwards by not leaving the time limit for claims open ended. Limiting the value of the claims also reduces the amount of low value claims, which neither party wants to be concerned with. It is also important that the potential buyer of the accountancy practice is made to mitigate their losses from any breach of contract.



It is imperative that both parties have certainty as to how any disputes will be settled in the future. They need to know what jurisdiction applies and which courts will have the power to determine any disputes.


Draper Hinks does not get involved in the drawing up of contracts nor does it advise on the legal aspects of the buying and selling of accountancy practices.  We are happy to recommend a firm of solicitors based in Leicestershire who are specialists in the area of buying and selling accountancy practices. There is so much to be taken into account prior to completing a deal, it is vital to work with someone who understands all the aspects, has recent relevant experience and can talk your language.  Draper Hinks have recommended this frim on many occasions because they are good, thorough and knowledgeable.

If you want to have some more information regarding this blog, or any other matter please email Nicola Draper at quoting reference Blog 150701


We have three USP’s that we are proud of and feel this makes us better than other Accountancy Brokers.

First – We hold meeting days for our vendors.

When a vendor approaches Draper Hinks and lets us know that they want to sell their accountancy practice or a tranche of their accountancy fees, there is a process that we undertake to make sure they are ready to sell. We get a lot of information from them about what it is they are selling, when they want to sell, what their practice looks like, what systems they use, what staff they have etc etc. All of this information forms the Profile of the accountancy practice.

Buying accountancy practiceWe then contact buyers in the area, who are looking to buy an accountancy practice, to find out if they are interested in buying this practice and we inform them as to when the meetings are being held with the vendor. At this point there is no mention of the vendor’s name or whereabouts of the accountancy practice. Anonymity is paramount at this point. The potential buyer has to sign our terms and conditions which includes a confidentiality clause. Once this has been received by us we release the profile information. If the buyer wants to have a meeting with the vendor we reserve a time slot on the meeting day. The vendor is inviting the buyers to the meeting day so that the vendor can interview all buyers to find out which buyer would be most suitable to take on the practice. It is a two way process and the buyer is at the same time, deciding if they would like to buy the practice.

We would aim for no more than four or five meetings at a meeting day. Each meeting is held on a one to one basis and is totally confidential. The vendor discusses the sale with each buyer and tells the buyer what they are looking for in the way of a deal. At the end of the day the buyer knows how the vendor wants to be paid, what income multiple is to be used, understands the time frame for offers to be submitted and when completion is to take place. All offers are sent to Nicola Draper and then forwarded to the vendor. By having a meeting day, the vendor will have a choice of offers and the time frame for completing the deal is reduced significantly.

Second – We hold Drop in Meeting days.

Vendors are often unsure about the process of how to sell an accountancy practice. Nicola Draper travels around the country meeting vendors face to face to discuss with them any issues they may have about how and when to sell their fees. These meetings are held in hotels away from the office of the vendor and are completely confidential. Many vendors have said how much they appreciate a face to face meeting with an expert in this field. Selling an accountancy practice can be a very emotional decision and talking to someone who has over a decade of experience can reduce any anxiety over what the next step should be and when.

Third – Draper Hinks has a hands on approach.

We work with the vendors and buyers to broker the deal. We have very regular contact, often daily and sometimes more than that. We work closely with both parties and like to know that things are progressing. We like to know when meetings are being held and like to get feedback from meetings. We are copied in on emails so can see immediately if there is a problem and can intervene at an early stage to get things ironed out.

We are proud to have the good reputation we have in the market place and have sold well over 100 accountancy practices in the last few years. We only sell accountancy practices and we know what we are doing.

If you want to talk about this, or any other matter please email me at quoting reference Blog 150602


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