Vendor Story £50,000 Birmingham

Details of a deal done in 2023  First tranche of fees 
Fees sold£50,000WhereBirmingham
QualifiedFCCAAge39
Time scale2 monthsType of Practice3 Partner firm
Payment3 tranchesHow paid30%  30%  30%
Multiple0.9 x feesWhen paidCompletion, 12 months and 24 months
Offers2 offersOffice & staffFees unencumbered by staff and office
ResultsVendor selling a tranche of audit fees

We were approached by this vendor at the beginning of the year.  He had a third share in a practice and had been approached by one of his clients to join them as their Financial Director.

He got in contact with Draper Hinks to see if we could come up with a way to make this happen.  The first thing we talked about was for him to speak to his other partners to see if they wanted to take on his client base.  Neither partner wanted to increase their workloads so they gave him permission to sell his client base.  It took some time to work out which clients were his to sell.  Once this had been done we decided to sell his fees in two tranches. 

The first tranche would involve the sale of his audit clients. He wanted these to be sold quickly because he had some audits lined up that needed to be started asap.  We found a buyer very interested in London who took on this client base.  The vendor was needed to help with a hand over so we could not sell the next tranche of fees for a couple of months. The vendor had told us that the audit fees could be serviced by the buyer in London but that the general practice fees would have to be sold to a local firm because the clients were used to coming into the office to see him. 

Second tranche of fees   
Fees sold£100,000WhereBirmingham
QualifiedFCCAAge39
Time scale5 monthsType of Practice3 Partner firm
Payment3 tranchesHow paidA third, a third and a third
Multiple1.1 x feesWhen paidCompletion, 12 months and 24 months
Offers3 offersOffice & staffFees unencumbered by staff and office
ResultsVendor selling a tranche of general fees

Having sold the first tranche of fees, the vendor knew what to expect.  We did a search of the area, came up with 8 potentially interested parties.  We vetted each of the buyers and reduced the list down to five.  We set up face to face meetings with each of the buyers on one rather intensive meeting day. 

The day went well. We had three firm offers and the vendor chose one.   The buyer was chosen because they had bought before, knew what to do, had a contract ready and had the funding in place.  From start to finish it took 5 months.  The vendor was keen to start his new job. His new employers were very patient and understanding.

Being a partner in an accountancy practice is not the same as having a job.  You can’t just give a month’s notice and leave.  You have to find a home for your clients and you have to do that in a way that does not harm the reputation or standing of the firm you are leaving.  So there is a lot of diplomacy that has to happen in these circumstances. 

The vendor was more than ready to start his new job and was over the moon when both tranches of fees were sold. He was very complimentary about the level of service given throughout the process.  We were very pleased to be able to help.  Happy faces all round.