This is usually the 2nd question asked by retiring accountants and it’s a very good one too. Sell your accountancy practice too early and you could be leaving too much on the table, sell it too late and you could well have missed the boat – what a waste!
But what about the FIRST question retiring accountants ask? That’s the next blog!
Meantime, here are 6 common reasons that bring accountants to me saying “I want to sell my accountancy practice”, each one on its own not necessarily being the catalyst but two or more taken together can make a compelling case
Sometimes in life you simply get fed up with something but when it is your business, often your largest asset or certainly one of the largest, it’s time to bale out. You may not even be able to put your finger on it but deep inside you know it’s time to go.
It is important to act sooner rather than later because the sale process can take time and can be draining and is certainly a major distraction from running your accountancy practice. The less impetus and energy you can put into the sales process, in terms of preparation, meetings and post-sale availability the harder it will be to achieve what your accountancy practice is worth or persuade a buyer that you have the ability to support them post-handover
For many accountants the thought of selling their accountancy practice when things are going swimmingly well seems counter-intuitive. However, often the best time to get out of something is when you are at the top.
Buyers will be impressed with a practice in its prime run by somebody who is selling without compulsion as it gives them confidence in you, your staff and your client roster. The right buyer will also pay the right price and if you are selling a polished diamond, you will do well financially. It is also easier to sell potential when the history is a good one, especially if growth has been stead and consistent.
As mentioned above, it can take time to sell an accountancy practice, especially if the location is far from a major population centre or there are issues that require addressing.
Fixing problem, especially if it involves staff or client profiles, doesn’t happen overnight. If it takes a year or two to get your practice sales-ready the time to start is now. Not only does it take longer than you think, but it will also impress a buyer if they see that you have spent time and effort bringing it up to scratch.
A rising tide lifts all the boats. Your clients will be doing well, buyers will be keen to invest and your cashflow should be strong. Once the economic cycle ebbs it can take time for it to pick up and this is entirely out of your control, usually without an end in sight. You don’t want to find yourself waiting to retire until the economy picks up.
Whether these changes are directly to do with accountancy itself or affect the wider economy, the unknown impact of these events is often the catalyst for accountants to sell their practice, especially older ones who are either resistant to change or simply cannot be bothered adapting to the changes. Making Tax Digital is a very commonly heard reason for selling up and retiring from accountancy practice.
The multiples achieved for accountancy practices has gone up significantly in many areas during Covid. The question is whether they have reached a new level, will continue to rise or will fall back. Nobody can accurately predict how a market will perform, not even a broker, but if you can command a good price then why not grab it with both hands and retire and sell your accountancy practice if it is something that was anyway on your radar.