On a Wednesday afternoon in March, we had a call from a concerned relative. His brother had just died. His brother was an accountant and had clients that needed looking after. His sister-in-law, was who was now a widow, did not want to have to deal with the clients of the practice on top of her own personal grief.
As it happens, the brother, an accountant as well, had sold his practice through Draper Hinks a few years prior to this event, before moving lock stock and barrel to France, knew the process that we followed. He called us and told us about the situation and that he understood why there needed to be a quick sale.
Luckily, and use the word advisedly, he was able to give us a breakdown of the fees for sale because his brother was up to date on all the client’s work and had access to all the information needed by a buyer. We got him to fill in a short form that we used as the summary of the practice. There were no staff and there was no office. This meant that the fees were totally portable. Obviously time was of the essence.
Clients were loyal to the widow and were told by the brother dealing with matters that a replacement was going to be put in place quickly so they clients did not have to worry about finding a replacement accountant. The brother was keen to find a new home for the clients and at the same time secure a payment for his sister-in-law if at all possible.
We were informed on the Wednesday afternoon that we had until Friday afternoon the same week to make this happen because the brother was going back home to France (funeral had already taken place) two days later.
We made this a priority and kicked into action. We were able to email a number of potential buyers in the area, explaining we had a practice for sale unencumbered by staff and office but that the vendor had died so there would be no handover and we needed a speedy sale. We managed to set up a meeting the following evening for the brother to meet a potential buyer. The spoke on the phone to arrange a time and place to meet but the buyer said he did not think it was for him.
We had a second string to our bow and had another buyer lined up, who cancelled a breakfast networking event on the Friday morning to meet with the brother. The meeting was attended by the brother and the two partners of the purchasing firm. The meeting lasted a couple of hours. The buyers agreed to do some light weight due diligence and a deal was agreed. A short contract was drawn up and was signed by all parties early evening on the Friday.
The deal took 2 days from start to finish. It can be done if there is a real need for speed. Because of the short time frame from start to finish and the fact that there was no handover the multiple offered was 0.4 x fees, paid on an earn out basis. Where a deal is agreed on an earn out basis there is no risk to the buyer because no payment is made up front. Payment is only made from fees received. The buyers had the resources, as in time and staff, to deal with matters straight away. The clients know who will be looking after them going forward. The widow was more concerned about the practice and what needed to be done about it than the money she would receive.
A good deal is where all parties win. The brother was happy and could go back to France not worrying about his brother’s practice. The buyer was happy to get some good quality clients for a significant reduction. The widow was pleased to know all had been taken care of and she would get payment in the future. We got paid a fee from the buyer within a few days so we were happy too.
If you or anyone you know is in this situation then speed really is of the essence. Not all accountants that die have a brother that is a qualified accountant who can deal with matters so quickly. Don’t leave it too late, call us or email us and you will find us sympathetic and able to give good solid advice about the next steps.
If you would like to discuss any of the above or talk about your own situation then please email me at email@example.com quoting reference Blog 160729. I look forward to hearing from you.