(Newswire.net — June 15, 2020) — If you intend to sell your accounting practice right now, you are probably one in a multitude of account practitioners looking to retire and sell off their firm.
However, making the decision to sell your accounting, tax or CPA practice is simply the first step along a rather lengthy road of disposing of your business.
A number of factors need to be considered after a practice owner has made the decision to sell their business. These questions cover a multitude of areas. Some of these are discussed below:
How will you market the sale of your CPA or Accounting practice?
Some practice owners prefer to market the sale of their business themselves. Others use the expertise and contacts of business brokers. There’s no right or wrong route here. What is important, is that the practice is properly marketed and advertised.
The more interest that can be generated in the sale of a business the greater the opportunities there are for the seller to get the most from the sale.
The terms of the sale?
This is a key area that many practice owners looking to sell first business overlook. The terms associated with the sale of a business are critical. In particular, sellers need to be aware of how the buyer is going to purchase the business. Will they have suitable finance in place to successfully make the acquisition? Will it be a single cash payment in full for the business at the point of acquisition? Are there any customer retention terms associated with the deal, and how could this effect the ultimate purchase price?
Furthermore, sellers need to be aware of any terms associated with the transition of the business to the new owner. For example, will they be required to work in the business once the sale is complete to help the new owner get up to speed and to ensure that existing customers remain with the new business?
Perfect timing for a sale
Different firms have their slow earning and fast earning periods. These periods affect sales value.
If your firm has seasonal clients, a busy tax season, or a financial downtime, you must avoid selling at that time.
Buyers will be anxious if you are handing your organization over with weak finances, so look into the perfect time to sell.
Pending payment for jobs done also makes up your revenue, so consider the possibility of claiming it after selling off your practice.
Smaller practices are easier to sell
It is generally easier to sell a smaller practice than a large one. Large accounting firms are more open to buying small practices because they will only be taking in a few staff alongside the organization. It is also easier to gain clients from a smaller practice.
If you are the sole owner of your practice and have the autonomy, it is even easier to sell it off.
Customer retention is important in sales
Buyers consider the level of customer retention before purchasing an accounting practice. The uncertainty whether your clients will stay back after you sell your practice keeps buyers on their toes. Hence, many buyers would insist on paying in installments depending on the number of clients who stay back to work with the new management.
You will be earning less or more depending on whether a higher or lower number of clients are retained.
The onus is on you to ensure your clients continue with the firm after you’ve made the sales. You can do this by fostering a good relationship between your clients and staff.
Your software and technology is important
How up to date and easy to use is your accounting software? Do you use popular mainstream accounting software or do you have a custom solution that may be difficult and expensive for a new owner to integrate into their existing systems?
A buyer will not want to purchase your firm if you use ancient software or spreadsheets. Up to date software such as tax management software and cloud accounting is an investment that will help you sell faster.
Synergy is a key component in many business acquisitions and ensuring that your in-house systems and accounting processes are up to date, documented and efficient, are all key areas potential buyers will be focusing on.
Planning and preparation
It would be best if you prepared a lot of things before placing your practice on sale.
Plan your sales pitch while highlighting the strengths of your practice.
Look out for potential buyers; consider marketing your accounting or CPA practice with sites such as BizBuySell or Bizquest. It’s also worth considering specialist niche business for sale sites such as the Accounting Practice Exchange, or local state CPA society websites, many of which have classified advertising sections dedicated to the sale and acquisition of accounting and tax firms.
Consider internal succession
Selling off your practice means your standard of practice, visions, and methods will change as the new owner deems fit. If you can’t make peace with that, consider handing over to someone within your firm.
Internal succession is easier for larger practices as they have rising partners willing to buy your equity. Smaller practices might not have such a system in place.
What’s important here is that the seller gets the market value for their business, and if selling internally they need to be particularly aware of ensuring they get the market value of their business. They also need to focus on how the acquisition will be financed and how and when they will receive funds from the sale.
Firm owners can advertise their accounting practice and connect with potential buyers without needing a broker or agent.
Be Patient
Selling an accounting, tax or CPA practice requires patience, perseverance and an attention to detail. The timeline for successful acquisitions can typically vary from anything between a few months and a year. There are circumstances when practices are sold quickly, but accounting practice owners need to ensure that they have realistic timescales when planning for the sale of their business. In many cases, practice owners have spent the best part of their career and livelihood in establishing and growing their business. In planning and executing its sale, they need to be realistic in the time and effort that will be involved.