REASONS GIVEN BY VENDORS AS TO WHY THEY HAVE NOT SOLD THEIR PRACTICE.
Draper Hinks has been selling accountancy practices for many years and has had a lot of successful completions. The time taken to sell a practice will depend on many things but you can reduce it down to the following important factors:-
• Turnover of the practice.
• No of staff.
• Where the practice is located.
• Willingness of the vendor to let go of the practice.
It is often overlooked how emotional it can be for a vendor to sell their practice to someone they do not know. Most vendors invest a huge amount of time and effort to grow the business and then look after clients. I often hear from vendors that they have become friends with their clients. Some will go to the birthday parties, weddings and even funerals of their clients. They can be used as unofficial counsellors often learning more about their client than they expected or even wanted to know. Finding the right fit between buyer and seller is therefore very important.
Buyers come in every shape and size. Some are just starting out and want to get their first foot on the rung of the ladder and others are national firms buying many times a year. We deal with all of them. If a buyer has not bought before, we will help them as much as we can. If a buyer has bought many times before they often ask our advice as to how best to put in an offer to match the wishes of the vendor.
When the deal goes through without a hitch that is always good, but we often get obstacles and hurdles along the way that have to be overcome, like the recent deal that went through were the vendor had to make 92 yes I did say 92 adjustments to the contract sent to him by the buyer’s solicitor. He still managed to plough through to completion but he found it a bit of a strain at time.
Some deals do not complete for various reasons:-
The vendor had a meeting day. Met with a number of buyers. Had one offer. Accepted the offer – all was looking good and promising. Terms were agreed. Time frame was agreed for due diligence. Time frame was agreed for completion. The buyer invited the vendor to his office to meet his business partner. The vendor did not like him. The deal fell apart. The vendor has decided not to sell for the time being.
The vendor had a practice manager to help run the practice. The vendor met a number of buyers and had two offers on the table. The vendor went to the purchaser’s office and met with the other partners. All were keen to proceed. Terms were agreed and time frame was agreed. The purchasers wanted to interview all the staff pre-completion to ascertain competency of the staff. Meetings were arranged. The practice manager did not like the purchasers and threatened to leave taking clients with him. The deal dissolved.
We had a vendor who was in his mid 70’s. He had been in practice for a large number of years and his practice turnover was beginning to decline each year. One of his staff had decided she wanted to retire and so gave notice. The vendor was not happy to accept the notice and did nothing to replace the full time qualified member of staff. She left. He then approached us to find a buyer saying he could not cope with the workload and things were about to fall apart if we did not find a buyer asap. We found three buyers. All of them put in an offer, but because the average age of the clients was over 70, the average fee was well below market rate and the portability of the clients was low, the two offers we got were less that 50p in the pound. The vendor did not sell and so the practice kept dwindling to the point all the clients had left.
We dealt with a vendor that wanted to do other things with her time. She did not want to run an accountancy practice full time. She asked us to market her practice and we found some buyers for her to interview. She had a couple of offers. One of the offers was accepted. The buyer took on a new member of staff to deal with the extra work load following completion of the deal. The vendor then found a practice manager to run the practice in her absence – agreeing to work one day a week. The vendor then pulled out of the sale and the buyer was left with a hefty recruitment bill from an agency for a member of staff he no longer needed.
Draper Hinks only deals with the buying and selling of accountancy practices. It has been doing this for over a decade and is very successful in what it does and how it does it. If you are thinking of selling your accountancy practice then contact Nicola Draper at Draper Hinks at email@example.com she would be happy to discuss your situation in complete confidence.