It is our job to find you high quality buyers or sellers and facilitate introductions. We go much further than just acting as a ‘dating agency’, as we guide both parties through the whole buying and selling process from start to finish, and often beyond.
We offer impartial expert advice and ‘hand-hold’ both parties through the negotiation process, ensuring both parties are happy with the agreement reached. We are able to clarify all issues on your behalf, whether you are the buyer or seller, and iron out any potential problems along the way. Only if the sale goes through does the buyer pay us.
We find buyers and sellers alike appreciate our comprehensive service and can supply testimonials to support this.
Armed with the facts, we will then contact appropriate potential buyers. We already know of many firms looking to buy accountancy practices. We will not reveal your identity as this stage. This personalised approach from us, followed by telephone calls, pays enormous dividends.
If you are a buyer, just contact us and we will ask you what you are looking for, the type of practice, in what area of work, location and expected fee income.
Whether you are a seller or buyer, we ensure our highly targeted marketing letters attract the attention of the right people. This method means you are much more likely to meet with success than through a scattergun approach
Sometimes, a local seller may attract more local interest but in this age of larger practices wanting to cover every part of England, our buyers and sellers come from all the country. Your location makes no difference at all to us (apart from the hours it means we spend on the motorway).
By understanding your business, we can take all the factors into account and find you the right solution to achieve the outcome you want.
It varies but £1 per £1 of fee income is a typical market rate. It comes down to what the buyer thinks the practice is worth. If you are based in an area where there are lot of buyers, then there is a chance the multiple may go up. If you have multiple offers to buy your practice then each offer will be different. Most vendors will sell their practice to the buyer that is the best “fit” which does not necessarily mean the highest bidder.
If you are a seller, we will do everything we can to maximise a good income multiple for your GRF.
Selling a block of fees ensures you still have some income, while benefiting from a sale. You should then be able to sell your remaining goodwill in the future.
Payment depends on how a deal is structured.
If you are selling less than £500k you can expect to be paid on a tranche basis. That is where the buyer will pay you an amount on completion of the deal and the rest typically at an anniversary of the completion date. Industry norm is for there to be one payment on completion, one payment at the end of 12 months and another payment at the end of 24 months. However, this can vary.
For fees being sold above £500k you can expect to be paid on an earn out basis. The buyer will do the work for the client, invoice the client and when the client pays a percentage of the fee received is paid to the vendor, normally payment is made on a quarterly or half yearly basis. The percentage paid is agreed between buyer and seller and this determines the payment period. For example if 25% of the fees received are paid to the vendor the payment term will be 4 years.
If the buyer claims under the clawback clause, the seller usually has the right of discovery to see the appropriate files and even to speak to the client, to ensure the loss is genuine.
The clawback clause is one of the more complex areas of the agreement and requires deep understanding and expertise to ensure it is fair to both parties and that both the buyer and seller understand what the implications are for them. Your solicitor can advise on an appropriate clawback clause for your needs.
It can also be detrimental to the sale and your selling price, as once the rumour mill has started, it is hard to stop. Clients and staff may hear it and start to look elsewhere.
It is one of the many advantages of using an experienced broker like Draper Hinks. We will keep your identity a secret until you authorise disclosure. We also ensure the buyers are serious and financially able to make a purchase. We will arrange for you to meet a number of potential purchasers and wait for your instruction to allow us to reveal your identity to them. This is usually done a week before your meeting with the buyers.
If you are thinking of relocating, an urban premises demands a higher price than a rural one. You might also consider areas of potential such as a redevelopment area, a new business park, an affluent area or an area with a lot of businesses. You should, of course, take account of how much competition is already in these locations. However, you should not overburden yourself with leasehold obligations.
It is certainly the case that urban practices have a higher value but while an urban location can drive prices to the higher end of the norm, a rural practice can still be worth a good price. Indeed, we have seen an increase in people looking for a rural practice that could give them a better lifestyle than they might have in a town.
Do ensure you already have in place agreements with any partners in the firm as to what will happen should you die.
Basically, the regulations state that the seller may not dismiss his staff to make the sale more attractive to a buyer.
A buyer must not make your staff redundant above his own staff or offer your staff a new employment contract that is worse than the one he or she had before.
Try and ensure you do not have a heavy liability concerning any leasehold. A buyer may want to service your clients from his own premises or will need a bigger office for future plans. If he doesn’t want your leasehold, you may be able to sell or sublet (but check your contract). Remember, if you have the head lease and then sublet, the landlord has the right to chase you for any unpaid rent if the tenant defaults.
Smaller practices wanting to buy as a way to grow may not have spare management resources or financial resources to acquire bigger practices. The acquisition of another small practice or block of fees can provide the solution.
Accountancy practices can also grow their client base by good marketing and PR. These days, you need a good website, with the right SEO words to achieve higher rankings on search engines.
A regular short blog and listings on local business sites will also raise your profile and therefore attract more clients. You could also network (at business networks, social clubs, charities, churches, etc) and form alliances with local solicitors, banks, IFAs and estate agents.
If a seller asks us to do a mail shot for them, we charge a small fee to cover it, but no other fees.
If a buyer asks us to do a mail shot for them, we charge a small fee for this and a brokerage fee if the purchase goes through.
In our experience, the targeted mail shot invariably achieves enough interest to lead to more than one offer to consider. It is very rare indeed for our approaches to fall by the way. If however we find we have not had any interest from any buyers we will then repeat the exercise and send out a second mailer at no cost to the vendor.
If you are interested in buying or selling accountancy fees then it makes sense to register with us. We are constantly in touch with a wide range of buyers all over the country looking to take on more fees. We need to understand your specific requirements so to express your interest please telephone us on 01788 816440 or email info@draperhinks.co.uk.