We understand that deciding to sell your practice is not a decision to make lightly. There are many factors that need to be taken into consideration. It is important that you know what you will be doing post sale. If you do not have a clear idea of how you will fill your time, then the idea of impending retirement can be a very scary thing. This will manifest itself in finding things to delay the sale. We worked with one vendor who knew he had to sell for health reasons, but didn’t want to, so he instructed two different solicitor firms to manage the process for him. Why? You will have to ask him that question.
Caveat emptor – Buyer beware.
The vast majority of accountants are very honest and hard working. This trait does not depend on if you are qualified or not. It depends on work ethic and values. At Draper Hinks we assume that everyone that comes to us that wants to sell their fees is honest and trustworthy. We always give them the benefit of the doubt until proven otherwise.
Trust is a big issue when selling an accountancy practice. The vendor has to trust the buyer that they will look after the clients so that the clients are happy and will want to stay. The buyer has to trust the seller that they are selling them a practice that is good value for money.
Many years ago, when Draper Hinks was in its infancy, we sold a practice where the seller was not truthful in what she was selling. We were contacted by the seller and we sent out our questionnaire for her to fill in, which she duly did. We then marketed her practice saying she was looking to sell he whole practice and move abroad immediately post sale. There would be no handover, so the price was reduced accordingly. In fact, the buyer agreed to pay a one-off fee with no clawback at a significantly reduced price. We had brokered these deals before, so this was not new to Draper Hinks.
The buyer put in an offer, the vendor accepted it and they moved to due diligence. The vendor had selected a “random” selection of files for the buyer to look at and check. These were in very good order and the buyer proceeded to put forward the sale and purchase agreement which quickly moved on to completion. The vendor then moved abroad as agreed.
Within a very short space of time post sale, the buyer contacted us to say that there were supposed to be 50 clients, but there were less than 10! The vendor had left no forwarding address and the phone number given did not exist. Due diligence was staged! The vendor was paid in one payment with no clawback and left the country and could not be traced or contacted. It was very upsetting for the buyer and for us, we were both taken in. I think if someone is going to scam you, they know what they are doing and they have thought it through very carefully.
The moral of the story is, if you are a buyer, always choose the files you want to look at during due diligence. However helpful the vendor is being by having files ready for you, then check more files and check them when you are at their premises. If you are not happy with what you are seeing, then contact us. You can either re-work your offer or you can pull out completely. That is the first and only time this has happened in over 20 years of Draper Hinks brokering fees.
We have brokered many hundreds of deals and are much more aware of how to protect our buyers and sellers. If you want to sell an accountancy practice or buy an accountancy practice please get in touch with me, Nicola Draper, on 01788 816440 or email me at n.draper@draperhinks.co.uk. Talk to me about what you want to achieve and let me guide and advise.