The importance of keeping everything confidential when selling your accountancy practice
It normally takes some time for a vendor to decide to sell their practice. It is not unusual for us to start to talk to a vendor 2 – 3 years before being asked to find a buyer. I often meet vendors away from their office to discuss the way in which a practice is sold, what the market conditions are like and what income multiple can be expected from the sale. Having this meeting offsite means the vendor can discuss their situation in confidence knowing the staff will not hear what is being discussed.
I did meet a vendor who had been advised by another broker to tell his staff and his clients he was thinking of retiring. He said it was the worst advice he had ever been given. The staff were up in arms and wanted to know where they stood and what was going to happen about their jobs. The clients were upset and many of them left to find other accountants. The vendor had not yet met any buyers and had not yet made his mind up when he was going to retire, he was just thinking about it.
One of the fundamental needs we have in society is to know where our income is going to come from. If our basic security is threatened then there can be significant repercussions. By telling the staff that he was thinking of retiring, without being able to say who was going to take over, when it was going to happen and if their jobs were secure, left all the staff feeling insecure and unhappy. The vendor had to work very hard to tell them that they were needed, valued and vital to the ongoing success of the firm. This was not a small practice, it had turnover well in excess of £750k but the principle is the same whatever size practice you have.
The clients also felt threatened not knowing who was going to be looking after their affairs. The vendor had worked with some of these clients for in excess of 20 years, even 30 years in a few cases. There is little or no loyalty from clients if they feel their accountant is about to stop working and many of the clients left and found other accountancy firms. The clients needed to know that their accountant could do the wages, VAT, management accounts, statutory accounts etc. The vendor was wrongly advised by the broker in the first place.
Yes, we do come across the occasional practice where the staff and clients know that the vendor is retiring. In one case, the vendor had been diagnosed with terminal cancer and only had three months to live. In another case, there was a two partner firm and one of the partners had a brain tumour. Staff and clients were very understanding in both of these cases and the loyalty factor was very high. We were able to find a buyer in both instances and the deal went through very quickly.
On going communication is also a factor when selling an accountancy practice. Once we have been given an instruction to find a buyer then we need to communicate with the vendor. One vendor asked me to text his girlfriend to tell her that I had emailed him on his home email address so that he knew when to open his emails. Another vendor only allowed me to email him between 5pm and 6pm each day and I had to email him to ask if was ok to email him. It was not uncommon for me to get an email back from him saying “no”. He would then instruct me as to when I could email him ie between 10.17 and 10.29 the following day. This made for extremely difficult communication between the two of us and I could never guarantee to be available to email him when he was free.
We do understand the need to keep everything confidential, but sometimes it is very difficult to keep vendors informed of progress when they do not make themselves available. If you want to talk about this, or any other matter please email me at firstname.lastname@example.org quoting reference Blog 150507
We are business brokers for accountants and deal with no other types of business, so if you are thinking of selling your accountancy practice, then please contact us on 01788 816440