Why is it that the end of the year creeps up on us and before we know it, it is December and the new year is just round the corner?
At Draper Hinks we facilitate the buying and selling of accountancy practices and for us 2022 has been a bit of a rollercoaster. Some months we have been very busy and have been on track to get back up to pre-Covid levels of business and then the next week it all goes very quiet. We are very grateful for any and all business that comes our way. If we don’t get a buyer the first time we market a practice we guarantee to try again. Often it is a matter of timing to find the right buyer.
Sellers are still looking for the “right” fit. High multiples can be very alluring, but at the end of the day the seller wants their clients to be looked after and their staff to be looked after. A buyer that does not have a similar outlook to the vendor may try to entice the vendor to accept an offer, but the retention rates will not be the same. Similarities, synergies and the same outlook will win every time. Offering more money will not make the “fit” better.
We have been contacted by more investors this year than any other year before. It is not unusual for us to have a conversation with someone wanting to buy an accountancy practice who is not an accountant but has money in the bank. There is a common misconception that money can buy anything. In our experience, that is not the case. An accountant will not sell to a non-accountant. Fact. The buyer wants the profit from the vendor’s business, without having any idea of accounts and the accounting world. In 2023 my hope is not to hear the phrase “But I have plenty of money and I know you like a challenge”. I don’t mind a challenge but I can’t make the impossible possible.
There are more online accounting firms than in previous years. The majority of vendors are looking for a buyer that is local to them. Clients still like to pop in to see their accountant. But this is beginning to change. We are finding that those vendors who do not see their clients very often will entertain selling to a firm not in close proximity to them. This trend is just beginning to happen and we see that this will continue to develop.
We are finding that MTD is beginning to have an impact on the market place. Many accountants have said they want to sell before it comes in. This might cause a glut of sellers in 2023. We shall see. To counter balance this, we have lots of hungry buyers whose appetite to buy is never satiated. So, we are looking forward to finding buyers for all of our sellers.
2021
Period % Practices Sold
January – March 14%
April – June 42%
July – September 28%
October – December 14%
From these figures you can see that there are more popular times in the year to sell your practice.
Average time from enquiry to completion 5.33 months
Average time from instruction to completion 4 months
Longest time from instruction to completion 8 months
Shortest time from instruction to completion 2.5 months
Unfortunately, we have had to deal with a number of vendors that have had to sell their practice due to ill health. We treat all these cases with compassion and care. Covid has caused a lot of stress for many of our vendors and some of the ill health has been directly caused by the pandemic, which is very sad.
If you are thinking about embarking on the journey of selling fees or buying fees and want to work with a broker that has over two decades of experience and understands that this is one of the biggest and most emotionally charged decisions you will probably ever make, then contact me, Nicola Draper. I can be reached on 01788 816440 or email me at n.draper@draperhinks.co.uk. Let’s have a chat.
We at Draper Hinks would like to wish everyone a prosperous 2023 and look forward to hearing from everyone.