What do you want?

Spend some time thinking about what you want. What would the best case scenario look like? What is absolutely not negotiable?

Is your buyer already working for or with you?

Selling your accounting practice to a third party can mean the end of your firm, as you know it. If you are keen to preserve the  vision and culture of your practice, look for someone internally.

In larger firms, partners can sell their equity to the remaining owners or rising stars. In larger practices, succession is built into the business plan. Partners can sell their equity to the remaining owners or younger staff. Do you have someone working with you who has the experience and leadership to run the practice, the capital to buy you out and the desire to take over?

If you have a good candidate in mind, start talking about your plan now. They’ll need time to decide and organise finances.

Will your clients stay?

Buyers rarely agree to an upfront sale because of the risk that clients will leave after the handover when the principal has gone. Instead, they’re more likely to request an earnout arrangement, where they pay yearly instalments adjusted based on client retention. It won’t be enough to show your client list. You’ll need to ensure that loyalty continues after you’ve left. Make sure your clients have confidence in your staff.

The quality of your clients can be just as important as the quantity. A slow growth rate may lower your practice’s value, so try to keep adding accounts. Are your clients easy to work with? Do they pay on time? Unprofitable accounts will likely hurt your sale price.

Is the timing right?

Beware of when you sell. It is best to sell in booming times than during a drought. If your practice has a strong yearly cycle, offer to sell just before the most profitable season so that your buyer can hit the ground running. Eventually, this might increase your sales price.

Is your data in order?

Messy data is the best way to turn buyers off. So the first step should always be to clean up your data. Get rid of old bad debt. Clear out the skeletons in the closet.

Are your accounts receivables cleaned up?

Money owed for work you’ve already done is yours. But few buyers are keen to chase it for you.  And even less to then hand it over to you. So collect your receivables beforehand or take them out of the business and hand them over to your buyer for them to keep when collected.

Is your technology up to speed?

If your practice runs on dated software and spreadsheets, then your clients are probably also dated, requiring a lot of low-yielding manual work. Which means less profit for your buyer in the future. So while technology is not a must as such, especially if you are just selling the client list, it does paint a picture of who your clients are. And even more importantly how your staff operate.

Do you know somebody who can help you?

Most accountants, tax practitioners and financial planners only sell once in their life, maybe twice. So consider using a specialist who does this as their daily bread and butter.