One of our USP’s at Draper Hinks is that we talk to vendors before they meet with a potential buyer via a “prep” call.
Most vendors have not sold before. A very few have sold a practice in the past, got bored, started again, built up another practice and then sold for the second time. Other vendors may have sold a tranche of fees in the past and are doing the same thing again. We have some vendors that sell a tranche of fees every few years in order that they can keep their practice at a manageable level thereby maintaining their work like balance. However, 98% of the practices we sell are for first time vendors, selling the whole of their practice.
At the meeting day, the vendors are inviting the buyers to meet with them so they let us have details of the venue where the meetings are to be held. They are in effect the hosts for the day. For practices with fees in excess of £250k it makes best sense for these meetings to be held at a neutral venue. Often the vendor will book a meeting room in a hotel with lots of parking. For smaller practices meetings can be held in the office or if the vendor works from home they will have meetings at their house.
Going into a meeting with a potential purchaser is quite daunting for the vendor especially if the buyer has bought a number of times before and their turnover is much larger. It is important that the vendor is not put on the back foot with the negotiations, so being confident in how the meeting is to be conducted is very important.
We will book a phone appointment in the diary with the vendor, ideally a few days before the meeting day, the purpose of which is to answer any questions the vendor may have about the process of selling.
In this “prep” call we will cover:-
- How to open the meeting and why this is important.
- Different ways in which a deal could be structured, bearing in mind the amount of the fees being sold.
- Current market conditions relating to the geographic area in which the vendor is situated.
- Factors a buyer will take into account when considering the value of the fees for sale.
- Time scale for when offers are to be in by and when completion is to take place.
- All ongoing communication to be through Draper Hinks up to the point of Due Diligence and why this is important.
- What the next step is and how Draper Hinks will monitor the situation going forward.
At the end of the “prep” call the vendors feel much better about the pending meetings and are confident about asking the relevant questions. Confidence leads to them being in control and that leads to an overall better experience for both the buyer and the seller.
In my mind it is vital that all vendors have a “prep” call, it really does benefit both parties. Buyers will come out of the meeting understanding how the vendor wants the deal to be structured, as in payments, multiple, offer date and completion date. The buyers will also know what they have to do and by when, so they are happy. As brokers, we are then better able to monitor progress through to completion.
In my experience, of facilitating the buying and selling of accountancy fees for many years, if both sides know where they stand when negotiating a deal the deal has the capacity to go through much more quickly.
We are very active in the market place and have managed over 270 deals since we started in 2004. We know what we are talking about, so if you are thinking of selling your fees then contact me, Nicola Draper on 01788 816440 or email me at n.draper@draperhinks.co.uk. Please remember everything discussed will be kept in the strictest of confidence.