At Draper Hinks we are business brokers and only deal with facilitating the buying and selling of accountancy practices. We do understand that deciding to sell your accountancy is a very difficult decision to make and you must not underestimate what an emotional decision it is too.
We have a lot more buyers on our books looking to purchase an accountancy practice than sellers looking to sell. Many buyers have bought before so understand the process leading to a reduction in time between putting in the offer and completion. However, there are many buyers that have not bought before so they will need more help and guidance. This can come from the broker who introduced the seller or from the solicitor that is acting on behalf of the seller.
If a buyer has to apply for funding, this can add a significant amount of time to the sales process. Banks require a form to be filled in, this is then put into their “system” and a decision on whether or not funding will be available can take several months. Often more information is needed and perhaps even a face to face meeting. It is very disappointing when, having waited for several months, the buyer is then told that they can’t have the funding. Other lenders are coming into the market to challenge the banks and they are the crowd sourcing lenders. These are not everyone’s cup of tea but are gaining respectability and credibility.
We had one buyer that was dependant on selling a property owned by them to be able to fund the purchase of the practice we were selling. Covid then hit, the property market bombed and the seller was left with no sale and no appetite to continue working. Not a nice scenario.
The buyer will be dependent on their staff to help absorb and integrate the new fees. Sometimes the staff working for the buyer off sick, away on a extended leave, taking time off to study or on maternity. In this scenario the buyer may ask for an extension to the time scale for buying. Dependant on the reason why the seller is selling will dictate if they are happy to work on this basis or not.
Some buyers will buy or rent a new office to accommodate the fees. Where there is a new build involved or a refurbishment, then it is not uncommon for there to be delays. Especially in the post Covid times of lack of building materials generally. This can make it very frustrating for both parties if they are not able to fix a date for completion.
Solicitors can also make a big difference. We worked with one solicitor who insisted on answering emails by letter in the post. That did not go down very well. Luckily there are not that many solicitors that work like that anymore. But then again, you do not want to work with a “yes but” and “what if” solicitor who finds reasons why things can’t be agreed. Use a solicitor that understands how these deals work and is prepared to get the deal over the line.
The buyer will expect to be able to review files at the due diligence stage. The buyer will need to see what they are buying. We have had instances where the seller has refused to allow the buyer to do any due diligence. This can delay matters significantly. But there are ways around this. A good broker can help and guide both parties if this is the situation.
This is not a full list of things that can affect the time taken to sell an accountancy practice. If you are considering selling yours or buying one then please get in touch with me, Nicola Draper, on 01788 816440 or email me at firstname.lastname@example.org. Let me see how I can be of assistance.