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Retiring Accountants - Case Studies
Practice Sales, Fee Block Sales
These case or retiring accountants and accountancy fee sales demonstrate our flexible approach at Maximiti because circumstances and needs differ. To us clients are individuals. Maximiti - thinking differently!
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1 - Taking time to retire as an accountant
The vendor was looking for exit strategy with a view to retiring after 5 years. She wanted to sell up sooner rather than later as she didn’t want the responsibility of running the practice and also wanted to ensure all clients moved across to purchaser.
Vendor had fees of £180,000 and wanted to receive £60,000 per annum for the next 5 years. In addition she also wanted a multiple of 1.2 X GRF.
Maximiti quickly sources a purchaser who had the capacity to integrate the vendor’s fees into his own practice without increasing the overheads by much. This allowed the purchase could pay the vendor her £60,000 per annum as well as retaining 2 staff members of the vendor and still have enough margins to pay the vendor the full value of his practice over 5 years.
Both parties were extremely happy with the structure of the deal as there was minimal risk of clients leaving as the vendor was fully involved in the practice and the purchaser was confident that he would get a very good return in the long term.
2 - Premises included for accountancy practice sale
Vendor called Maximiti looking to sell his practice but only wished to do so if he could sell the practice premises as he was looking to move abroad.
We managed to find a purchaser who wanted to move to the area where the vendor was located.
In order to make the deal a viable option for both parties we offset a portion of the value of the property against the goodwill deal which meant the purchaser minimised the risk of being left with a property if the deal didn’t go to plan and the clients didn’t move across.
The beauty of this deal was that in the long term the vendor received the full value of the practice but it also meant the purchaser was reassured that if he had to implement any clawback it would also decrease the payment of the property. As such the vendor stayed on for longer than he intended to and made sure all clients moved over to the purchaser which meant the buyer also received a good return on his investment.
3 - Flexible consultancy for a retiring accountant
The vendors had been in accountancy practice as partners for over 15 years and were simply fed-up of the constant change the profession seemed to be throwing at them and decided it was time to sell. In short it wasn’t what they signed up for, although the practice was very profitable with a high average fee.
The partners were aged around 50 so were not ready to retire although they did have external business interests. Given the prosperous hinterland and strong client bonds we suggested a deal whereby they would be retained by the purchaser as consultants for 3 days a week at the same rate of their basic salary on a rolling contract.
This reduced the buyer's risk and stress of integration whilst giving the sellers a route to exit , as and when they wanted whilst allowing them to focus on their other ventures.
4 - Niche premium for accountancy practice sale
The vendor was approaching retirement age after 35 years of accountancy practice but still felt that he had a “good few seasons” in front of him so preferred to ease his way out at leisure . He had built up a very successful niche advisory practice specialising with a narrow focus on a particular business to consumer sector and the firm’s name was well known and respected in trade circles. There was still plenty of scope for a younger accountant to develop the accountancy fees further with his guidance.
He felt that the brand was worth more than a standard valuation and given the rapid growth and solid traction gained in recent years we suggested that they ask 1.75 x fees on condition that he remains for a fixed period of 3 years as an associate in order to allow the buyer to get his feet firmly under the table with the publications who promoted the firm to their readers.
5 - Ethnic match for accountancy fee sale
The vendor was from an ethnic background as were many of his clients. He was going away for an unspecified period of time to care for an elderly parent in accordance with the custom but only had a few weeks to deal with selling his practice due to the sudden onset of illness “back home”.
We had a willing buyer on our books, from a similar background, who therefore understood and was sympathetic to the vendor's position. Given their shared ethnicity the buyer was easily able to substantiate the background to the sale story . The deal was agreed within a fortnight at a multiple of 0.6 x with no clawback.
6 - Partial retirement with accountancy fee sale
The vendor sought to retire from practice in stages so asked us to consider a fee block sale. We looked at the client profiles and advised her how to split the accountancy fees . It worked best for her to retain clients based on proximity to her home from where she would continue working after vacating the office.
The buyer saw a clear logic and was happy with the arrangement as it allowed them to absorb a small fee block into their existing operation without causing much disruption, paying a multiple of 1.3x
7 - Partners retiring at different times but selling their accountancy practice together
One partner was ready to retire immediately but the other was a few years younger and still enjoying going to work each day. The deal was agreed on the basis of 50% of the shares being purchased from the retiring accountant and 40% out of the remaining partner's 50% stake being purchased simultaneously. The outstanding 10% stake of the remaining partner was to be purchased at an agreed future date using a formula to reflect expected growth during the intervening period.
8 - Serious illness or unexpected death
In both cases we had to act quickly as the practitioner was not able to assist with handover and any new incumbent would be faced with what amounts to a case forensic accounting cum incomplete records job. Not only is this extremely time consuming, especially as one seller had no staff , but the other employed somebody who was threatening to leave with the client list, which was very disappointing and would be tricky to handle. We advised the family that a quick move would keep sympathetic clients on board although it goes without saying that we were dealing with a fire sale. Any delay risked clients encountering problems that even the most sympathetic could simply leave to fester. It also prevented the employee acting in bad faith as she knew that loyal clients would not tolerate such a move so soon after the breaking of the sad news.