You might be wondering:
– How much will my accountancy practice sell for?
– How do I determine an asking price?
– How do I find potential buyers to sell my accounting firm?
– How to sell my accounting practice through a broker?
On the last question: Use a broker when you only need a connection to a buyer (i.e. when selling real estate or stocks). Instead, use an M&A advisor to sell your business because what you need is vastly more complex. Details on that and more answers are ahead.
Think Years, Not Months
If you’re wondering how to sell your accountancy practice and walk away after closing, it isn’t possible.
Much of the value of an accounting practice is tied to its owners — to their expertise, reputation, and relationships. In most successful sales, that value is transferred to a buyer over a multi-year transition during which the seller works 2 to 35 hours per week. The seller should have a sales- or profit-sharing incentive to complete an effective transition. Consequently, most accounting firms cannot simply be sold for just a fixed payment at closing. This is especially true for selling a small accountancy practice. It applies to public accounting, tax accounting, forensic accounting, and bookkeeping firms to varying degrees, and largely depending on firm size.
Seller Beware: Protect Yourself
Because selling an accounting firm entails sharing sales or profit with a buyer you have just met, you need protection. We recommend the following:
(1) List the adverse outcomes that can occur. For each, design a resolution mechanism that protects your assets.
(2) List the possible disputes that can arise between you and your buyer. For each, implement a binding procedure for resolving the dispute fairly and at a low cost, ideally without involving courts or lawyers.
Deep expertise in designing protection mechanisms matters. (Hint: We are exceptional at it.) Lawyers will draft the legal language that implements protections in a contract, but only a capable advisor can design protection mechanisms. Proper protection design requires economics and finance expertise, not legal expertise.
Exit Strategies for Accounting Firms: Auction or Ad Hoc
Did you know you can sell your accounting firm via an auction? If you are like other accountants and have a strong preference for orderliness, then an auction can be perfect for you.