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What do you have to contemplate when the time comes to sell your accounting practice? Among other things the author discusses personal considerations, transition problems, how to choose a successor (the buyer), and structuring the transfer The seller must know at least as much about the purchaser as the purchaser knows about the seller
By the time their clients are five to 10 years from retiring, most accountants have already reviewed and assisted in working out their financial and continuity needs, including possible future mergers or sales of the businesses. Many accounting firm owners with only five years to retirement, however, may not have not yet established a successor, either within or outside the organization.
The answer, of course, is for the sole proprietor or accounting firm to give careful thought and planning to the succession of the practice. The practice may have taken many years of hard work and quality service to establish. It probably is expected to be the source of income in retirement years, either through the form of periodic payments or as a lump sum from a successor. In any event, maximizing the benefit from the practice will depend upon the successful transfer of clients to another practitionereither future partners or a purchaser of the practice. Both the transferring firm and the successor firm will want a successful transition. Clients that are lost in the transition will usually reduce the payout to the retiring party as well as being a dampener to making future deals by the successor firm.
Ownership transitions are difficult. How to prepare for and maintain continuity, especialy when egos as well as dollars are at risk, is indeed a major question.
Considerations When Selling a Practice
The single most important concern to selling or transferring a practice is the likelihood that the clients of the transferring practitioner will remain with the successor firm. Without the prospects of continuity, there can be no viable transfer. Although many variables come together in deciding when and how to sell a practice to reasonably assure a successful transition, there are some that have greater impact than others. For purposes of the discussion, the transferor will be referred to as the seller, even though the client service may be assumed by...