As most of our readers know, we only deal with accountants in practice. We are business brokers for accountants that want to sell fees and for accountants that want to buy fees. Most vendors want to sell their whole practice but we have had a number this year that want to sell only a tranche of fees.
To date we have done over 259 deals and I am waiting to hear if we have had two more completions as I type this blog, bringing our total number of deals to over 260. I consider myself to have a lot of experience in dealing with the sale and the purchase of accountancy fees but still I am surprised by the ingenuity of some accountants when it comes to putting in an offer. I have to say I am rarely baffled by what the buyer’s intentions are in an offer, but it does happen, and then I have to get clarification to make sure I understand what the offer means before putting up to the vendor.
Unlike last year where our first completion was on the first of January, our first completion in 2018 was on the 12th January and our second on the 7th February. For Draper Hinks, January is not a busy time at all, however, we get manically busy at the end of February right through until the end of May/June.
This year we had 2 completions in March and 5 completions in April. All the work done on these deals was done the previous year. Anyone selling fees at the end of the calendar year will normally take a break from negotiations during December and January, which means that average times for completion are extended.
We had 3 completions in May, 6 completions in June, 4 in July and only 2 in August. Usually things go quiet in July and August because of the holiday season which adds time to the sales process. The rest of the year has been steady.
MTD has had some effect on the number of deals that we have done but some practices have not been possible to find a buyer for, due to the age of the vendor and the location of the practice. Our average age for the vendors has gone up a lot this year. Normal average age is around 64, this year it is nearer 70. Many vendors are selling because they do not want to have to deal with MTD. If that were not being proposed then I am sure many of them would carry on.
Some vendors still have manual systems. This does affect the price paid because of the cost of the data input that the buyer has to undergo post completion. MTD has not had an impact on the multiples. We have not had the buyer fatigue we were given to expect. We still have a lot more buyers than sellers, so unfortunately we end up disappointing a number of buyers that have been registered with us for a while.
During 2018 most of our deals were completed in between April and September. This bucks the trend for 2016 and 2017. At Draper Hinks we have been selling accountancy practice since 2004 and we have yet to find a “typical” accountancy practice. Trends move on a regular basis so we have learnt not to predict anything. We monitor and review.
2017
Period % Practices sold
January – March 21%
April – June 26%
July – September 16%
October – December 37%
2018
Period % Practices sold
January – March 12%
April – June 35%
July – September 31%
October – December 9%
Average time from enquiry to completion 5 months
Average time from instruction to completion 4 months
Longest time from instruction to completion 12 months
Shortest time from instruction to completion 1 month
Last year we had our best year ever and this year we have also had our best year ever, so we continue to grow and do well. I would like to thank everyone for supporting Draper Hinks and making us so successful. We are getting a reputation in the market place for being experienced, knowing our “stuff” and telling it as it is. I am happy to have that reputation and am always looking for more work. So, please get in touch if you have not already done so.
We have the systems and processes in place to deal with you and the sale of your practice. If you want to contact us to discuss your situation in confidence, then please email me, Nicola Draper, at n.draper@draperhinks.co.uk. I look forward to being of assistance.
Best wishes for 2019.