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