Five Considerations When Selling an Accounting Practice
Successfully selling your accounting practice takes much planning, time, and consideration. You will have many questions to ponder, and you may not know how to prioritize. Even more, you may not know what you do not know, and failing to realize that could lead to missed opportunities. If you are selling your practice, below are the five most important considerations to ensure a successful transaction.
Determine the Fair Value of the Practice
If you want to make the most profit possible from the sale of your accounting practice, make sure you understand how an accounting practice is valued. Profitability and longevity of clients are two major factors, as is the average revenue per client. EBITDA (cash flow) of the business is the single most important factor, so the more profit you Practice produces, the higher the value.
Consider Your Options
You have many options when choosing the person to whom you will sell your accounting practice. You may even have a family member who is interested. This option in particular, is something you should remain wary of. A study out of France shows that when you sell to family members, you will most likely take a lower price.
Also, if you are considering selling to someone that just obtained their CPA designation, they may think starting their own firm is a preferable option than buying for a high price. You must take all of your buyers, and their capabilities and limitations, into consideration when selling your practice.
How Much of the Practice to Sell
You may want to sell your entire practice, or you may only want to sell a portion of it. For example, you may want to sell your practice as is, including the employees, the name, the client list, and everything else that goes with it. Whether you sell whole or part of your practice will impact not only the price you sell for, but also the type of buyer you attract, so it is an important consideration.
You may think you are doing the right thing by informing your clients as soon as you put your practice up for sale. Doing so will likely only result in a great deal of panic, questions you cannot answer, and potential client attrition, which will only impact the value of your accounting practice. As such, we suggest that you only tell clients once a buyer has been identified and the sale is impending and at that time, implement measures that will make the transition smoother for them.
Work With a Business Broker in Washington
If you are selling your accounting practice, you may think you can do it alone, but a Washington business broker is a great help. At Private Practice Transitions, we can help establish a fair value for your business and advise on every important consideration during the sale. Call us today at (253) 509-9224 or contact us online to schedule a meeting and to learn more about how we can help.