Draper Hinks is a business brokerage, we facilitate the buying and selling of accountancy practices. Sometimes we will sell the whole accountancy practice and other times we will sell a tranche of accountancy fees. Whatever we are selling, we follow the same process. We collate information about the fees for sale, we contact potential purchasers, we arrange for the buyer and seller to meet, we receive all offers and help the seller to decide which offer is the most suitable, we then track the process through to completion.
Offers come in many shapes and sizes. We have had them that are over a dozen pages long, outlining the history of the buyer’s practice, the market conditions, the strategic growth of the buyer and how the vendor’s fees fit into that, the outline of the offer, the payment terms and what will happen to staff and premises. Now, admittedly, this is unusual. Normally the offer is only a few paragraphs long.
However, at the other extreme, we have had one sentences that purport to be an offer. These do not cut it as an offer. I will not accept the following as an offer: “We will pay 1 x fees”. I have had to reject these types of offer on more than one occasion. If the buyer cannot put time and consideration into drafting an offer, then the vendor will assume they will not put time and consideration into the hand over and ultimate running of the practice post sale. If you are a buyer, put more effort in.
It is not unusual for a buyer to put forward more than one offer. There can be different scenarios. For example, a shorter payment term may mean a lower multiple: a longer payment term may mean a higher multiple. A buyer may offer less if they have to take on the office premises and staff. A buyer may offer more if the fees are portable and can be moved to their office. The offer may be lower for a speedy completion and higher for a longer time to completion.
We have had one instance where the buyer offered a different multiple dependent on the ages of the clients. For example, anyone over the age of 65 – 0.7 x fees applicable, above 55 – 0.9 x fees applicable and below 55 -1.25 x fees applicable. This can become very confusing for the seller and they are less likely to accept this kind of offer than a straight forward 1 x fees for all of it. In this instance the buyer wanted to reduce their risk by offering a tiered multiple based on age but by doing this they lost the opportunity to buy the fees.
We have also had an offer where the amount paid to the seller depended on the rate of recovery by the buyer. For example, 1 x fees for a recovery of 90% and over, 0.8 x fees for a recovery of between 75% and 90% , 0.6 x fees for a recovery of 60% – 75% and below that nil. The vendor did not go with this offer, I wonder why?
Please remember that we do have a lot of experience in helping sellers to sell and buyers to buy. If you want to sell your accountancy practice and talk to someone who knows their “stuff” then contact me, Nicola Draper on 01788 816440 or email me at email@example.com. Let’s have a chat and see how we can help you to get what you want. I look forward to hearing from you.