Selling your practice is a significant decision that requires careful planning and consideration. To help you navigate this process, we’ve put together a guide to arranging and managing the sale of your business.

Making the decision to sell

Deciding to sell your practice is not always straightforward. Here are five key considerations to keep in mind before taking the plunge:

Evaluate your motivation

1. Reflect on why you want to sell. Are you experiencing temporary challenges that might be resolved with a break, or does running a business no longer align with your life goals? Alternatively, are you looking to sell to fund your retirement?

Determine your practice's value

2. Accountancy practices are generally marketable due to standardised processes. To accurately determine the value of your practice, it's advised to consult a specialist broker who operates within the industry. Their expertise in selling similar firms allows them to provide a valuation based on a variety of factors, ensuring you receive a fair and comprehensive assessment.

Consider your team

3. If you employ staff, aim for a deal that ensures their welfare. The buyer's approach to staff retention and treatment should be a crucial factor in your decision.

Plan your future

4. Decide what you want to do post-sale. If you wish to stay in the accounting field, discuss this with your buyer, as your sale contract will likely include non-compete clauses.

Finding a buyer

You might know a local accountant interested in expanding through acquisition, which can help you avoid agency fees. However, using an agent can be beneficial as they can shortlist potential buyers and negotiate on your behalf. Finding a buyer with similar specialisms to yours can reduce the risk of clawback—a reduction in the sale price based on the retention of clients.

Preparing Your Practice for Sale

To achieve the best price, ensure all systems are well-documented, essential paperwork is in place, and demonstrate that the business can operate independently of you. Smartening up your office space, even if it's a home office, can create a positive first impression.

A potential buyer will want to see the following, usually after signing a non-disclosure agreement (NDA):

• Client list: Detailed information on recurring fees, work done, principal profiles, industries, and trading formats. Client names are withheld until the sale is agreed.
• Staff list: Job roles, salaries, benefits, and working hours.
• Premises details: Information on size, rent, and remaining lease term.
• Sample working papers: Examples of your documentation and processes.
• Software details: What software you use and for which tasks.
• Business accounts: Three years of your own business accounts and possibly management accounts.

You may choose to inform your staff about the sale early on, although it is not mandatory.

Negotiating a deal

Several factors come into play during negotiations:

• Price based on GRI: The price is often a multiple of your GRI. Demonstrating that your business can run independently of you can justify a higher factor. The client base's nature, including age profiles, also influences this.
• Payment period: Acquisitions are typically paid over one or two years. Opting for upfront payment may lower the price.
• Clawback: If clients leave after the sale, clawback provisions allow the buyer to recover part of the payment. This can be 100% of lost GRI in the first 12 months and sometimes 50% for the next 12-24 months.
• Non-compete agreement: You'll be restricted from offering competing services to your former clients for a specified period.
• Assets vs. Shares: Decide whether to sell the business assets or the company's shares, considering tax and liability implications.
• Insurance: Post-sale, you'll need run-off insurance for a period (typically six years for ICAEW members). Initial premiums are similar to normal fees, decreasing if no claims are made.

Using a good solicitor is recommended for these negotiations due to the significant sums involved.

Arranging the handover

After finalising the deal, inform your team and explain the sale's impact. Once your staff understands and supports the transition, they'll help reassure clients about the changes.

Notify key clients personally and arrange introductions to the new owner, either face-to-face or via video calls. For remaining clients, prepare an introductory letter and email detailing any significant changes.

On the sale day, transfer all client and business records to the buyer, including arrangements for archived records. Ensure insurances are transferred appropriately and consider issuing a press release.

A handover period, usually two months, will follow. During this time, be available to make introductions and address any queries about previous work. A smooth transition increases client retention, which benefits the final sale price.

Then, it's time for your new adventures!

Do you need expert guidance in selling your practice? Get in touch with our team at Insite M&A. We’re here to help you through every step of the process. 

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