This has been a strange year for the buying and selling of accountancy practices. At the beginning of the year we had a number of vendors looking to sell their accountancy practices but, for the first time ever, we were unable to find any buyers.
In the 12 years I have been selling accountancy fees I have never know the market to be so sluggish. Even when borrowing was hard to obtain, we always found buyers for sellers. However, I am pleased to say, things picked up towards the end of the summer. We still sold accountancy fees throughout the year but I had to tell a number of vendors that we could not find any buyers anywhere, which upset both them and me.
Our first completion of the year was on the 2nd February 2016. The deal was all agreed in 2015 but the vendor wanted to wait until January was out of the way before completing the sale. It is not unusual for vendors to wait until February for completion, because January is usually their best billing month of the year. So by selling in February they are flush from invoicing for work done in January and then get paid again by the buyer in February on completion of the deal.
In June Brexit came along and we had one casualty. We were selling a practice in the South West and had got to the point where the offer from the buyer had been accepted and due diligence was planned to start the day after the Brexit result was announced. On hearing the news, the buyer informed both the vendor and me that he was going to pull out of the purchase because he was not sure what was going to be happening in the market place and felt very nervous. I thought that the buyer was using Brexit as a convenient excuse to pull out of doing the deal. With hindsight the world did not stop, nor have all accountancy practices come to a grinding halt, so I still believe the buyer was not being altogether honest about his reasons for not completing the purchase.
We had one vendor who tried to sell his accountancy practice in July, we went to market and we had no buyers interested, not one. I told him to be patient and that we would try again to find a buyer in September. Three months later, same practice, same fees, same location, same staff, same office with nothing changed, we had four interested purchasers. He has not completed the deal but he has accepted a good offer from a buyer that has bought from us before, so I have every confidence the deal will go through. The vendor told me that he was as keen to sell as the buyer was to buy. You tell me, how does the market place change so much in three months?
Things started looking better for us after the summer holidays were over and we have, to some extent, picked up the momentum for selling accountancy practices again. Looking at the trends in the year for practices sold by us:-
Period % Practices sold
January – March 14%
April – June 35%
July – September 19%
October – December 32%
Period % Practices sold
January – March 16%
April – June 24%
July – September 24%
October – December 36%
It is sometimes difficult to read much into trends when selling accountancy practices but it appears in the last two years we have sold a lot more at the end of the year. This may be driven by the fact that many vendors do not want to have to do another January. They often get extremely stressed and that can cause ill health, which can sometimes lead to serious complications and even death.
Our oldest vendor in 2016 was 89 years old. His family were helping him to run the practice and he became less able to manage the day to day work. Over time he became more frail and we ended up selling the practice through a family member who had to relay all the information to the vendor. So the practice, to all intents, was sold by proxy. This added time and complexity to the deal going through. Despite that, we still managed to get the vendor a choice of offers. The buyer he chose was very pleased to be taking on a good quality practice even though it had been neglected for a few years due to the ill health of the principal.
With quarterly accounting being introduced in 2018 we are beginning to get more enquiries from vendors who do not want to adopt the new procedures. My prediction for 2017 is that we will be approached by many accountants who want to retire before 2018. If you are one of them then please do not leave it too late, make enquiries within 12 months of wanting to sell.
If you want to contact me to discuss your situation in confidence, then please email me, Nicola Draper, at email@example.com. I look forward to being of assistance.