I would like you to think of your accountancy practice as an apple pie. When it comes to selling your accountancy practice, you could sell all of it, half of it or just a small slice of it. Not all vendors want to sell the whole of their practice, some like to downsize and ease their way into retirement. Others want a complete change and do something totally different that does not involve deadlines or any type of compliance.
I have come up with some examples of how vendors have sold “slices” of their practice otherwise known as tranches.
Example 1
We had a vendor that worked from home. He had no employees and ran what could be described as a lifestyle practice. He liked to keep his turnover capped at around £70k. His overheads were low and he had a very nice net profit. He had no problems getting new clients and as his turnover hit £120k he would call me and we would find a buyer for his £50k tranche of fees. This would alleviate the pressure on his time. With the proceeds of the sale he would then go on to ebay and buy another piece of antique silver to add to his ever expanding collection. He likes to repeat this action every few years and yes his silver collection is now rather special.
Example 2
We had a vendor in the North East who was worried that he had no pension and was concerned that he would not be able to afford to live comfortably in retirement. He had grown his practice to a point he was comfortable and was turning away clients. I stopped him doing that immediately and told him to take on all new clients. We were then able to package up a tranche of £70k of fees to sell. With the proceeds from the sale he was able to put down a deposit on a buy to let property and thereby start to build a property portfolio. Over a few years he has added to his portfolio and his future is not looking so bleak.
Example 3
We sold £100k of fees for a vendor from a turnover of £200k. Having done this he was no longer responsible for upkeep of an office or responsible for staff. He moved his practice to work from his home. He now takes longer holidays, has less stress and takes more out of the practice than he did when it was twice the size.
Example 4
One of our vendors was struggling to cope with his workload. He was bringing in new clients on a regular basis but could not find good quality staff to help him with the ever increasing workload. He was working 7 days a week and getting very stressed. He contacted me saying he was beginning to suffer health problems and was going to have to sell the whole practice and do something completely different. We talked through his options and came up with the solution that what he needed to do was to sell a slice of his practice to alleviate the pressure on him. He identified £125k of fees he could sell, we found a buyer, he sold the fees and is now continuing with his practice, not working all the hours there are and as a bonus has both a family life and a social life.
Example 5
Another vendor wanted to concentrate on her larger clients, doing more consultancy work and management accounts. Giving proactive business advice and becoming a quasi FD for several of her clients. In order to free up her time she decided to sell off all of her compliance only clients. The fees for sale came to £175k. We found her a keen and willing buyer. She now spends her time working with and in her client’s businesses enjoying watching their turnover grow. She is much happier and is making a lot more money. Her aim is to build her practice to a turnover of £1m.
My point here is that you may not have to sell all of your practice. It is not always a case of black or white, do or don’t, stay or go. Talk to us about your situation. There is chance we could come up with a solution that you had not thought of. I am Nicola Draper and you can get me on 01788 816440 or email me at n.draper@draperhinks.co.uk. I would like to talk to you. Please remember everything discussed will be kept in the strictest of confidence.