MTD is going to be introduced in 2019. At Draper Hinks we predict that there will be many accountancy firms that will not want to embrace the changes necessary to be MTD compliant. This will affect the market place.
This is a great opportunity to buyers because we envisage there will be more practices coming on to the market for sale. Some of the more aware vendors will be looking to sell their fees in 2018 and not wait until next year. So, if you are considering buying fees now is the time to be registering with Draper Hinks. We will want to know where you are looking to buy, up to how much and what specifications you may have.
This is a great opportunity to sellers also, because there will be more buyers on the market looking to buy fees. This is a very good time of year to be putting your practice on the market. Buyers are flush with money from their best billing month in January. They will be thinking “how can I get more of this”. Strategies are decided in February, when it is quieter, for the rest of the year, often to grow by acquisition.
If selling up to £50,000 of fees, most buyers can accommodate that with relative ease. Between £50,000 and £250,000 it would be normal for the buyer to amalgamate the fees into their existing practice. Above £250,000 the buyer will consider the purchase as a stand-alone office. I have to say that this is a rule of thumb learnt from working in the industry for many years, which means that there are exceptions to the rule. We do have some buyers that will not consider a stand-alone office for anything under £1m.
It is a well-known fact that buying fees can be the quickest way to growing an accountancy practice. Time and care need to be given to the bedding in of the clients. We find that sellers want to find a buyer that will continue to give the same level of personal service that the clients have been used to. No seller wants to make their staff redundant so most sellers are looking for the buyer to keep the staff on post sale. If a buyer does not want to take on the staff then this can and often is a deal breaker. The buyer will be logical and will look at the numbers. The seller will be more emotional and look at the people doing the work. The first is a logical decision and the other is an emotional decision, both carry significant weight and neither can be ignored. We did sell a practice where the salaries of the staff equalled the turnover being sold. But there were extenuating circumstances and the deal done was a one off.
So, if you are considering buying fees in 2018, make sure you are registered with us. If you are thinking of selling your fees before MTD, don’t wait until 2019 when there may be many other practices on the market.
If you want to contact Draper Hinks to discuss your situation in confidence, then please email me, Nicola Draper, at firstname.lastname@example.org.