We were selling an accountancy practice in the South West of England in a very rural area. There are far fewer accountants in rural areas which automatically makes it harder for us to find an interested buyer. Vendors understand this. Where an accountant moves to a part of the country that is de-populated for their own lifestyle reasons, this does not always help with the selling of the practice with the time is right.
Being in a rural position may help with quality of life but it can mean it takes a lot longer to find a buyer for their fees. So, you can imagine my pleasure when a potential buyer contacted Draper Hinks to say he may be interested in buying these accountancy fees that we were marketing.
I booked a time to talk with him to find out a bit more of his history. He told me he had bought twice before and that 75% of principals in his area were over the age of 50. His strategy for acquiring accountancy fees up to that point, was to sit and wait and offer a very low multiple when any fees came to the market. However, he was intrigued to know more about what we were selling.
His practice has grown primarily from word of mouth and referral. Turnover has increased organically but should an opportunity present itself, such as the accountancy practice we were selling, he likes to find out more about it. This lead to our phone conversation.
He has bought two practices in the past and has offered to the vendor 20p in the pound which is the same as a multiple of 0.2 x fees. It surprised me that any vendor would accept this amount, but he said the vendors were more interested in finding a home for their clients than getting paid a large amount for them.
His philosophy, which appears to be working, is to not be in too great a hurry to acquire. There is no competition around where he is based, so he can afford to wait for the vendors to come to him. His firm is growing year on year without acquiring. He has no need to pay the going rate. I can’t fault him on his marketing strategy, it seems to be working well for him.
Oh, you might ask how we got on with our vendor in the very same area as this potential buyer and I am happy to say he got offered and accepted £1 for £1 or in other words, a multiple of 1 x fees. See, it always pays to work with a broker.
If you want to discuss the possibility of selling your practice, then please get in touch for an initial chat. Remember everything we discuss is confidential. You can contact me, Nicola Draper, on 01788 816440 or email me at firstname.lastname@example.org.