Are you considering retirement or trying a new profession besides your accounting practice? If you’re itching to make a fast exit, check out our tips for selling an accounting practice quickly and painlessly.
A simple way to bypass the difficult and time-consuming process of filtering through potential buyers, negotiating, and working on the transition is to have an internal succession. Selling internally ensures a quick and easy transition to new ownership with stability and a continuance of your vision.
If you’re the majority stakeholder of a larger firm, you can consider selling the equity to other partners or someone considered a rising star at the firm. There are also other options for internal succession, like the employee stock ownership plan (ESOP), which allows the employees to own part or all of the company they work for.
Sell to a Competitor
While it may sting some owners to consider, you can often find a capable and ready buyer by looking to a competitor. There are pros and cons of selling your practice to a competitor, but one benefit is that it typically allows for a quick handover and exit for the owner.
Competitors are more likely to be motivated to acquire your accounting practice and expand. Plus, because they’re familiar with the business and local market, they understand your firm’s value better than outsiders. If you have a good relationship with a competitor, consider contacting them to see if they’d be interested in acquiring your firm.
Compile Accurate Financial Records and Statements
When you put your business on the market, potential buyers will want to look at accounting and financial statements. Therefore, a good first step to selling your practice is to compile all the necessary financial records and statements that show your practice’s situation.
If your financial records are disorganized, they’ll likely scare away potential buyers or drive down the selling price. Ensure all your records and accounts are in order before putting the practice up for sale.
Tie Payment to Client Retention
Another way to motivate buyers and sell an accounting practice quickly is to tie payment installments to client retention. Client retention is key to the value of an accounting firm; if all the clients leave when ownership changes, the value of the practice will plummet.
Therefore, many buyers of client-based businesses like accounting practices won’t agree to an upfront payment and will instead ask for annual installments tied to client retention. With this agreement, the payments will increase if the firm retains and attracts new clients. But if the practice loses revenue, installments will go down. If you’re confident in the competency of your staff and new ownership, this is a good way to sell while opening the opportunity for your practice’s value to go up.