Preparing Your Firm for Sale: 8 Things to Consider

As I’m gaining maturity (sounds a lot better than getting older), I seem to be asked more and more questions about selling an accounting or bookkeeping practice.

Having sold the bulk of my shares of Talbot & Associates CPA myself, I’ve learned a lot about the process and probably had more time than most to think about what I would do differently. I’ve also had the opportunity to help other practitioners through the process of selling and retiring.

I’ve broken the selling considerations into eight areas that I’ll very briefly share with you here.

1. Timing

When will you sell your operation? Next year? In three years? Five years? Ten years? Longer?

Regardless, I would very strongly recommend that you start giving this eventuality some consideration as soon as possible. The sooner you start thinking about and preparing yourself and your firm, the better off you will be.

And let me just say, there are a LOT of things to consider well in advance. More than most people think.

2. Value

What is your firm worth?

Everyone has their own idea of what their practice is worth, but there are many factors that will impact the price.

Too many practitioners believe that a firm is simply worth a multiple of revenue. In my opinion, revenue should certainly be considered, but there are many other factors that can be equally, or even more, important.

3. Buyer fit

Finding the right buyer for your practice is critical. In my opinion, it can be far more important than price.

You want to be sure that whoever buys your practice will take great care of your clients and, even more importantly, your team.

You also want to know that the buyer shares the core values that matter to you if they are about to take over something you’ve spent years building.

4. Your reason for selling

Why do you want to sell your practice?

If you’re selling simply because you’ve had enough of the stress, pain and grind, you may want to step back and consider whether selling is really the answer.

Is there something you can change in the operation that would make coming to work fun again?

More than once, I’ve seen practitioners ready to throw in the towel only to make some changes to their operation and discover they were no longer interested in selling. They started enjoying being owners again.

5. A partial sale

You may also want to consider selling only part of the practice.

That could mean selling a block of clients based on services, geography or another factor.

If you really hate doing audits and find them less profitable than tax work, for example, why not consider selling the audit clients?

Odds are excellent that there’s a buyer out there interested in that portion of your practice. You may end up enjoying your practice more and possibly becoming more profitable in the process.

6. Due diligence

Look at your practice from the buyer’s point of view.

What can you do to make their decision about buying your practice easier?

Get your information in order and be prepared to give a serious buyer meaningful insight into the practice. That may include your team’s productivity reports, utilization and realization, revenue mix, and the number and types of engagements you perform.

Think about what a buyer ought to know about your firm and make that information available early in the process.

Good preparation can also help keep the transaction moving. Deals that drag on are far more likely to lose momentum or fall apart.

7. Deal structure

Think about how you can structure a deal that provides a good return for you while also giving the buyer a reasonable opportunity to succeed.

Some sellers might say, “I’ve sold the practice, so I really don’t care whether they succeed or not.”

Really?

I doubt that’s true for most people.

You’ve spent years building the practice, serving your clients and working with your team. I think, deep down, most sellers would feel a lot better seeing the buyer thrive and continue what they’ve built.

There are ways to structure the deal and transition that can help make that happen.

8. Letting go

This one surprised me a lot, and it often surprises others.

I thought, “Retiring from my practice will be great. No more obligations, no more stress, no more clients pissing me off, and all the time in the world to do the things I enjoy.”

Long motorcycle rides, travelling, woodworking and so much more. My list of hobbies went on and on.

What I did not expect was how much I would miss feeling useful and needed. Having people come to me for solutions. Having a purpose. Having something to work on that made a difference.

Having a sense of fulfilment.

Wow.

I lost part of my sense of identity.

That adjustment can be far more difficult than many high achievers expect, and I believe it’s something you should think about before you sell, not just after.

Talk to people who have done it

I would very strongly recommend reaching out to people who have sold their practice and asking them to share their experiences.

What went well? What didn’t? What surprised them? And what would they do differently?

And, of course, I’d be delighted to sit down with you and discuss any of the above. I’ve been through it myself and have helped others work through it.

The initial conversation is free of charge. I’m simply happy to share what I’ve learned.

If some of my pains can alleviate yours, well, you’ll be giving me some purpose and helping me with my continuing adjustment to working less.

If you’re considering selling your accounting or bookkeeping practice and want to explore these topics in greater detail, visit my guide on How to Sell Your Accounting Practice and Retire Well, where I cover the key steps to prepare your practice, protect its value, plan the transition, and prepare yourself for what comes next.