REASONS WHY VENDORS WANT TO SELL THEIR ACCOUNTANCY PRACTICE.
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 firstname.lastname@example.org quoting reference Blog 150805