Seven steps to successfully selling your business,
as verified by other vendors


1 Time frame.

When do you want to sell?  If you are thinking of selling in the next twelve months then you need to take action now.  Do not leave it to the last minute.  It is surprising how long it can take to sell a practice.

If you want to sell in a few years time then it would still be a good idea to work towards getting the best deal for your fees.  Practices are bought on the basis of the amount of fees being sold, so you should be looking to increase your turnover in the meantime.  Talk to us about how you can do that.

“After 12 months of unproductive attempts to sell my business through various agencies, I almost gave up.  Then I was introduced to Draper Hinks.

After only two months of working with Nicola, I was offered six potential buyers and after a further 4 weeks I had sold my business.  I would have no hesitation in recommending Draper Hinks to anyone who requires minimum fuss and maximum outcome.”
Wendy Farmer, Accounts Management Services. Seller – Skegness.


2 How much of your practice do you want to sell?

Are you looking to sell the whole of your practice? 

It is most common for a vendor to sell the whole of their practice and all buyers prefer the vendor to do this, thereby reducing the likelihood of competition from the vendor still being in the marketplace, post sale.

Some of our vendors sell 50% of their practice and continue working, selling the rest a few years later.  This can fit well into a planned retirement and phased downsizing. 

Other vendors sell the majority of their practice, keeping a small tranche of fees to work on, so that they move into semi-retirement.  Their client base typically consists of friends and family.  This may mean that they can give up the stresses of running an office and managing staff and can work from home on a part time basis.  This fits well into life style changes where you don’t want to give up work entirely but want to slow down the pace.

There are all sorts of permutations as to what percentage of your practice you sell.  A buyer will not be interested in buying fees much less than £20k, so the size of the tranche has to be sufficiently large to attract the attention of a buyer.

“I sold my small practice through Draper Hinks and was surprised to find that it had a value in the open market.  I could easily have retired, thereby losing the capital available to me. 

Nicola was there to manage the process from start to finish and was proactive in keeping me informed about what was happening.  It was refreshing to work with someone that listened to my concerns. I highly recommend Draper Hinks to anyone wanting to sell their practice, however small.”
Les Harrison, L J & J Harrison Associates. Seller – Stafford.


3 What are you selling?

A buyer will want to know what it is that you are selling. 

When you put your practice on the market the more information you are able to give a potential purchaser about the make up of your fees for sale, the more professional you will appear, the smoother the transaction will be and the better the income multiple you will get.  We sold a practice recently that had fees of £50k.  It took the vendor three months to collate the information before we were able to put his practice on the market. Then a little while later we dealt with a practice with turnover of £950k and it took two days to give me all the information we needed.  It is easy to work out which one impressed the buyers.

The information provided to a purchaser depends on the size of practice being sold.  No confidential information is given to the purchaser in the initial stages of selling your practice. 

For a larger practice, a buyer will want to know: the number of partners in the practice, their ages, qualifications, specialisms, if they are salaried or equity status etc.   The buyer will also ask about staff ie how many, areas of competence and qualifications, how long have they been with the firm, salaries, bonuses, number of years worked for the firm, charge out rates etc. 

A buyer will also expect to be given the last full year’s turnover and accounts for the last three years – this information is not normally given at the first meeting and can be held back until both parties are further into the negotiations.  We can advise as to when to release this information.

There is a lot more information that is given to buyers about your practice for sale.  Please be re-assured that no buyer is given any information until they have signed our terms and conditions which includes a confidentiality clause.

For vendors of smaller practices, we would expect to be given a spreadsheet by the vendor, showing a breakdown of the client listing ie Type of client (window cleaner, motor mechanic, art dealer etc), Type of business (Sole Trader, Partnership etc), Work done (VAT, accounts, payroll etc), Fee charged and Geographic location. 

Sometimes these spreadsheets have a lot more information on them, and that can be very helpful, but the above constitutes a reasonable overview of the fees for sale.  No names of clients or the names of their firms are included in the spread sheet.  Details of staff, premises, computer systems used are also given.

For both large and small practices for sale we can give you more information about what is needed from you before we can start to market your practice.  Give Lorraine a call on 02476 303121 or email her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and she will be happy to give you more information.

“Nicola was professional, confident and very informative.  I would highly recommend her to other people without a doubt. She was always there to give advice and kept me informed all the way through the process until the deal was done.” 
Chris Brown, Christopher G Brown & Co. Seller – Bristol.


4 What are you looking for in a buyer?

Our advice to you is not to sell to the first person that approaches you saying they are interested in buying your fees.  You may know someone that has been talking to you on and off for a while that has indicated they are keen to buy your fees from you.  You may have known this person/ these people for many years and been on several courses together.  This shows that you have something of value to them that they would like to buy and they will expect you to sell your practice to them at a discount, because they have known you for a long time.

If they are interested, then other people will be interested.  You owe it to yourself and to your staff and clients to find the best match possible when looking for a buyer.  You need to find someone that has the same ethos as you, the same working practice, a similar outlook for how to deal with clients, a similar temperament etc.  Just because this interested party is geographically near to you does not mean a sale to them will work or give you the best deal.

We provide a selection of buyers for you to choose from. We would arrange a day for you to meet potential purchasers.  This could include any firms that have shown an interest in your fees in the past.

By meeting these buyers in one day:-
• You will be able to compare like for like.
• Because other buyers know that your practice is in demand, this can drive up the income multiple being offered.
• You are more likely to get a good fit for your client base, which will increase the retention rate of your client base thereby increasing what you get paid for any second and third tranches.
• You can find out if the buyer has experience of buying before and how they coped with the transition of ownership and minimising the attrition of the client base.
• You can see how different firms manage their clients and their staff, you can compare computer systems, accountancy packages, charge out rates etc etc.

We find that vendors will sell to people they like and get on with.  It is not uncommon for a vendor to sell to a buyer that offers less money because they feel the fit is better.

“The sale of my accountancy practice through Draper Hinks was far easier than I had imagined.  The process was very professional and Nicola’s personal approach to both me as a seller and to the potential buyers made it all straight forward and a pleasure.  I would whole heartedly recommend Draper Hinks if you are looking to sell your practice.”
Ben Fells, Curve Accounting.  Seller - St Albans.


5 What about your staff?

If you currently employ staff, their needs have to be taken into account.  Throughout the meeting day you can compare how another firm runs its practice. 

You will be looking for synergies and commonalities.  You will be wearing several hats at the meeting day.  You will be deciding which buyer you like best, which one is best for your staff and which one is best for your clients.  The most important thing to bear in mind at the meeting day is that you may not find an ideal match so you may have to be prepared to compromise and be flexible.

A buyer may not want to take on some or all of your staff.  Redundancy may have to be paid.  TUPE  (Transfer of Undertakings (Protection of Employment) Regulations 2006) may apply.  Draper Hinks does not advise on these matters but can point you in the right direction to get up to date professional information.


6 Selling your office premises.

You need to consider what you want to do if you currently have an office.  Do you lease it or own it?  How many years are left on the lease, is there a break clause etc.  If you own it, do you want to sell it or rent it out?  A buyer will need to know your thoughts on this, when you put your practice on the market.

If you are selling a large practice ie where it would be hard for a buyer to accommodate the staff and client base into their office, then it is usual for the buyer to buy the office as well as the practice.  Market rate will be paid for the office premises.  It is normal for the purchaser to get a valuation for the property and the vendor to get a valuation.  The price paid will be somewhere in the middle of the two valuations.

It is our experience that both parties will want the deal to go through and the price paid for the office premises will be something reasonable to both sides.

“Nicola explained the process to us clearly and we reached an offer so quickly it exceeded all our expectations.  Working with Draper Hinks has been excellent and we have had great support through the process.  We were put in front of a hand picked selection of high quality, serious buyers who wanted to buy both our fees and our office.

Nicola was interested in us and our needs.  We felt that we were her number one priority and it was about doing what was right for us rather than simply achieving a quick sale.  Draper Hinks offer a fantastic service to all sellers and we would recommend them without hesitation. We have worked with two other agencies over the years and neither was a patch on Draper Hinks who exhibit far more individual client care. To sum up the service, we could not be more impressed by the quality of service provided and by the quality of buyers we were introduced to.  Fantastic!”
Richard Brewin, Progress Accountants LLP.  Seller – Ashby


7 What is the current market place like now?

You will need to speak to us about this as income multiples do tend to fluctuate depending on what you are selling.  However, as a rule of thumb, you should expect to get somewhere in the region of once times fees.  Fees may be GRF or may be turnover – it depends on your circumstances.

Funding for a buyer can also be an issue.  A first time buyer will have more difficulty raising funds to buy a practice than a firm that has a tried and tested line of borrowing.  However, we have come across first time buyers with money in the bank waiting to find the right practice to buy, so it all depends.

A deal can be structured in many different ways.  The industry norm for reasonable sized practices is for the money to be paid in three tranches: a third, a
third and a third.  The first third is paid on completion of the deal, the second at the end of twelve months, with the final tranche being paid at the end of twenty four months.  However, the trend is for the first payment to be front end loaded ie 50% paid on completion, with 25% at the end of the first year and 25% at the end of the second year.  Clawback will apply in the first and second years. 

How you get paid will depend on your situation.  You may be happy with an earn out where you get paid on a monthly basis over a longer period of time.  This is where the buyer pays a percentage of the fee collected from the client to the vendor, as and when the buyer is paid by the client for works done.  Buyers like this method of payment because they do not have to borrow any money and it minimises their risk. 

However, it takes longer for the vendor to get their money. If a vendor is paid in tranches it typically takes two years. With an earn out the term is usually three to five years.  The buyer usually states which way they are prepared to pay for your practice.

Due diligence can take different forms.  I have sold practices on the back of a hand shake with no due diligence and I have sold practices where every file is looked at and checked.  We can give guidance with regard to what is reasonable.

Not all vendors and purchasers have a legal contract drawn up with regard to the sale of a practice.  It depends on both parties.  We do not give legal advice but can recommend someone that has done work for our vendors before and has a very good reputation.

You will be expected to work a hand over period.  This can be two weeks, two months or two years. It depends on what the buyer wants and what you want. You have to be sure of what you want when you put your practice on the market.  Some vendors stay on for six months working for the buyer to help with bedding in the client base.  The vendor will be paid for their time at an agreed hourly rate. Some vendors work five days a week, then drop to four days a week, then three etc over a period of a few months, easing themselves out gently.

It all depends on what suits both parties.

“I have worked indirectly with other agencies and was in talks with other companies, but Nicola blew them away – they were not a patch on what Nicola could offer.”
Brian Wood, Brian Wood & Co Ltd.  Seller – Burton on Trent


Next Step

Call Lorraine on 02476 303121 or email her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .  Decide on a course of action.  You have only one chance of getting it right to sell your practice and it is vital that you make the right choices. 

Do not leave it to chance by selling to the first person that approaches you. You owe it to yourself, your staff and your clients to get the best fit and the right fit.  The right purchaser will care for your clients, look after them, nurture them and keep them. They will pay you a good and fair price for them.

 


PS  Remember it is the buyer that pays our brokerage fee so there is no reason for you not to get in touch with us.