Maximising value for accountants since 2007
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We love answering questions for retiring accountants

Retiring accountants 

Wanting to sell an accountancy practice

 

Frequently Asked Questions

If you are a retiring accountant and want to sell an accountancy practice we've got the answers to the most common questions, but if you have another question on selling an accountancy practice please do not hesitate to contact us.

   

  • How much is my practice worth?

    A business is normally worth the amount a buyer is willing to pay, however accountancy practices are different in this instance. There is a "going rate" with accountancy practices and purchasers have this in their mind when looking to acquire. The current going rate is between 1 and 1.2 multiplied by the annual recurring fees. Obviously by having a significant number of purchasers chasing your practice, it should push the multiple nearer the end of the going rate.The more potential buyers you meet the greater the possibility of asking for sealed bids or holding an auction-style competition.However, this is time consuming and may not be worth the effort. Profitability and productivity is always a major factor in determining the value of an accountancy practice and there are many other factors in the valuation equation. This is where specialist advice is required.

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  • Can I protect my anonymity for as long as possible?

    At Maximiti we are acutely aware of the sensitive nature of buying and selling professional accountancy practices and will at all times endeavour to ensure the highest level of confidentiality and discretion. We will discreetly advertise your firm in the accountancy press, never mentioning your name, practice or location and primarily we will actively try and seek the most suitably matched firm of accountants, for you. This guarantees your anonymity at all times.

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  • Will I be required to work in practice after the sale?

    This is a point which is always up for negotiating. With our experience we like to advise for the seller to be involved with the purchaser for a period between one to three months. The advantage is that this will ensure the smooth transition of your clients to the acquirer. Although a direct contact with the clients is not always encouraged after the sale, it is beneficial to all to know that the predecessor is still on hand if need be.

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  • How long does it take to sell a practice?

    This normally depends on the urgency of both the seller and acquirer. You can expect the whole process to take from anything from six weeks up to six months but at Maximiti we guarantee to respond to all correspondence or queries immediately. We have on occasion sold a practice in 48 hours but there are of course ramifications in terms of price and clawback.

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  • What is the best time of year to sell?

    The records over the years have shown that there are two main upturns in the market. The first is between mid February to June and the second is from September to November. Obviously this is the time when vendors come out to sell but the whole sale-acquires process spans over the whole year.

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  • What is "Clawback" and how does it affect me?

    Clawback is a clause in the sale agreement documentation. In the event of the acquirer losing the fees in an agreed period of time (normally one year) they deduct a percentage of the remaining balance. In the event that a purchaser makes a claim under the clawback clause, the vendor has the right of discovery. They may look at the appropriate client files and if necessary, speak to the client and confirm that the loss is genuine. This is one of the more intricate parts of the deal and requires real understanding and expertise to make sure that not just is the clause fair to all but most importantly that you understand exactly what it means for you. We will be on hand at all times to explain the smallest query which you might have.

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  • What happens about my work-in-progress and debtors?

    It is normal procedure for the vendor to collect his own debts and to agree the level of work in progress at the point of completion, for the purchaser to finish off the work in progress and bill it and remit the vendors share at 85% of sale price on an as collected basis. The 15% is a collection charge retained by the purchaser. Any under recovery is apportioned.

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  • After what period of time can I expect full payment?

    This depends on the size of your practice. For a smaller firm payment is usually received in two stages. The first payment is upon completion of the deal and the second is on the first anniversary. For a larger firm there are normally three stages of payment. The amount at each stage is open to negotiation and for that reason our staff are highly skilled in negotiating to ensure the best possible outcome for all.

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  • I have a few long serving staff and would like them to be taken care of, is that at all possible?

    We acknowledge that you have staff that need to be looked after and we will endeavor in our negotiations to have them at the forefront of our minds when dealing with your sale. Most purchasers will want to acquire the services of your staff and you can make it a priority with us when we attempt to find you a suitable match for your practice.

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  • A number of clients don't want to move or the acquirer does not want them will this ruin the whole deal?

    This is one of the points where Maximiti differs from other brokers. We have a practicing accountancy practice where we will service the clients who either do not want to move to the acquirer or which the purchaser does not want to take on.

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  • Can you find someone to purchase my practice premises?

    Maximiti is well acquainted with professional and successful property businesses around the U. K. and will willingly broker a deal between yourselves and them regarding your premises.

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  • How high could a practice valuation go?

    For a well run and efficient practice with all clients on standing orders it could fetch up to 1.5x GRF. If a bidding war ensues for your practice the value could end up higher, but it means you must be prepared to show more than one buyer all the details of your practice

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  • How do you market an accountancy practice?

    We use a variety of online and offline methods to market practices, as well as interrogating our own database for suitable matches. We have an extensive list of qualified buyers or we can arrange a bespoke campaign for a practice where we feel it would be beneficial.

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  • I am planning my retirement - when should I think of selling ?

    A retiring accountant needs to consider the demand in their area and also the health of their practice. A further consideration for retiring accountants is whether they wish to continue working after the sale as a consultant, which could be beneficial to the overall terms. As a rule of thumb it is advisable to start planning for an accountancy practice sale upon retirement within 5 years of the planned retirement date. It's never too early to speak to agent and it should not cost you anything.

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  • My staff want to buy my practice - is it a good idea ?

    Staff are very often the best people to sell your accountancy practice to as they know the clients and are familiar with your modus operandi.Nonetheless you should still treat it as a formal sale as if you were selling to strangers. We would advise that you use a broker to ensure that you strike a deal that is optimised for both parties, although you can expect to pay much less since you've done the hard part already yourself - finding a suitable buyer.

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  • I have a buyer for my practice but I am a poor negotiator - what do you suggest?

    You are best advised to use a professional broker as an intermediary.It is much easier to stand firm or extract concessions for somebody who is at "arm's length" and emotionally detached.As you have done the hardest part, finding a buyer, the fees will be much lower but you will also benefit from their experience in selling accountancy practices.

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  • How can I tell if my accountancy practice is in a suitable state for selling ?

    The best way to find out is to spend time analysing your practice, either on your own or with a colleague or consultant.Very often the owner of a business is too close to the action to notice a problem but an outsider, especially an experience agent, will pounce on it right away.Typical red flags to practice buyers are staff turnover, rising debtors, steady client attrition or increasing work in progress. These things are so easily overlooked in the rush to sell, especially if you simply want to get on with and finally retire from accountancy practice.

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  • What steps do you take to ensure a buyer is suitable ?

    If we do not achieve a sale we don't earn our commission so it is in our interest only to introduce parties who appear to be a good match and can be reasonably expected to complete the deal.Obviously much depends on the chemistry between the seller and the buyer but we do our best by making all buyers complete a comprehensive questionnaire prior to allowing them to meet a seller.This weeds out the "tyre kickers" and timewasters.

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  • What fees should I expect to pay for selling my practice ?

    The fees can typically vary from 2% upwards to 6% . Some agents also charge an upfront commitment fee or a cancellation fee for withdrawing from the market within a specified period. A good broker will be flexible and try to ascertain the nature of the assignment fully prior to advising of their fees and costs, as no two deals are the same. Larger sized practices typically command a lower fee and very small ones may be asked to pay a fixed sum rather than a percentage.

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  • What are the most popular locations for accountancy practice buyers ?

    Typically the large towns and cities attract more buyers when a practice become available. North West London is one of the hottest areas and demand exceed supply here even more than other places. When a broker hears the words "I want to sell my accountancy practice" from this area, especially Finchley or Edgware they know that they will have buyers lined up.

    Rural accountancy practices are less commonly put up for sale but they tend to make sound investments when they do. The client profile tends to be wealthier and more loyal, and such practices are often part of the fabric of the local business community. If you have ties to a rural locale your chances of successfully acquiring a practice are substantially greater.

     

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  • I am a tax specialist without recurring fees - how does this affect my practice valuation ?

    This is a common concern for accountancy practices that are only so in name but in reality specialise in tax advice. Their clients tend not to be recurring although they may have a loyal following of fellow accountants or solicitors who refer business to them on an ad hoc basis.

    If you can demonstrate a good track record of clients being referred to you or having a referral channel that is a steady earner, there is still significant goodwill in your practice and that will have a value that can be sold. The clawback may need to reflect the nature of the earnings compared to a typical accountancy practice.

    Bear in mind that you may be required to stay on for a period if you yourself have knowledge that is particularly narrow in its speciality and not easily replaced.

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  • I cannot afford to sell my accountancy practice but I am struggling to grow it - can you advise ?

    The question is really the reason why you cannot afford to sell. Is it because it provides adequate income that covers your lifestyle and you have no other source to replace it,  or is it because the state it is in will not reflect the true value of the accountancy practice ?

    If the former then it may be a case of having to weigh up the pros and cons of remaining in practice versus retiring from practice and seeking an alternative income stream or cutting back your lifestyle. 

    If it is the latter then it is probably worth engaging a consultant to help identify where you are missing out on fee opportunities, growth potential or whether your overheads are simply too high.

    The accountancy scene has changed substantially in recent years and the clock won't be turning back, so make sure you don't get left behind and stuck in the rut.

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  • Is it easier to sell some of my accountancy fees rather than all ?

    Whether you are selling all your accountancy practice or some of the fees only, the process is fundamentally the same, although in certain respects it is easier but in others it is more complex.

    When disposing of an accountancy practice in its entirety you are handing over the keys to everything including premises and staff potentially, which obviously makes the process lengthy and intricate with more matters to be covered by the contract and greater due diligence by the buyer.

    When selling a block of accountancy fees the rest of you operation is untouched as far as the buyer is concerned. All he or she is interested in are the fees being acquired, but it has the potential for problems post-sale, as essentially you are choosing which clients to "kick out" although you have not retired from accountancy altogether, and some of them may feel resentment.

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  • I am facing a professional disciplinary hearing – will this impact upon the sale ?

    It probably will but the extent will of course depend on the nature of the misdemeanour and how well it is publicised. It is advisable to make the buyer aware of any pending action because if they find out themselves it will breach any trust they have built up , which is an essential and fundamental part of any deal.

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  • Do I have to commit to a single agent ?

    Each agent will have different contractual requirements but for a particularly difficult or niche assignment it is quite reasonable for the agent to request sole rights for a period of time , usually 12 months.

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  • I specialise in expert witness reports so fee recurrence is unpredictable – is this a problem ?

    Once your firm has established a reputation amongst the legal profession for producing good quality reports there is no reason why this cannot support a valuation that is close to the market norm. One area of vulnerability is that future business could be undermined by legislative changes affecting the court process as part of ongoing attempts to reduce legal costs. This could be addressed within the terms of a clawback agreement, which in any event would be different to the normal sort as there is not a standard billing cycle.

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  • My practice is a preferred adviser to a trade body for its members – is this worth more ?

    If you can demonstrate a longstanding relationship that is working well and you have created a brand then you may be able to command a premium depending on market conditions and an ability to convince a buyer that the arrangement can survive your departure.

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Often the answers provide the reassurance needed to enable the practitioner to make the decision to sell. Whatever you decide to do, we can help make the process of selling as easy as possible.

 

These questions are addressed to an outright seller but are also frequently asked by potential acquirers and merger parties. Whether you wish to sell, merge or buy please call us for a confidential discussion during which we will be more than happy to answer any queries you may have.

 

 

Putting the customer first is integral to Maximiti's modus operandi, ensuring that you will receive a personal, sympathetic and professional service at all times regardless of the size of your practice.