Selling your practice can be a time-consuming process — one that is often drawn out by mistakes and misunderstandings. By understanding and avoiding common pitfalls that impact the sale of an accounting business, you can sell faster and maximize profits.
Failing to Get a Professional Valuation
Getting a professional valuation might seem unnecessary, particularly for an an experienced accounting professional. However, a valuation is the foundation for the process of selling your practice, and an incorrect figure might educe profits or sabotage the sale down the road. A specialist makes an objective assessment of the practice and takes into account the many changing factors that affect the value of a business, from income and assets to location and employee loyalty. With an accurate number, you can better determine how to approach the sale and create an exit strategy that meets your needs.
Ignoring the Vetting Process
Selling an accounting business can take months. Vet buyers early in the process to prevent disappointment and avoid wasting time. A potential buyer who drops out or cannot get financing can cause long delays. At a minimum, you should verify the buyer's financial status. If possible, examine each buyer's capability to carry on your practice in the way you desire. Does each buyer have the abilities and resources to provide excellent service to your loyal clients? Are they skilled in your particular area of accounting? Do they understand the ins and outs of the industry well enough to guide your current employees? By pre-qualifying each person, you can smooth the process of selling your practice.
Not Preparing the Practice
Selling your practice impacts a variety of people, including clients and colleagues. One of the biggest pitfalls of the process is failing to prepare everyone affected by the sale. In doing so, you risk losing employees, sabotaging client relationships and ruining the reputation of the business — all factors that can kill a successful deal. Part of the preparation process includes speaking to employees, marketing the sale as a benefit to clients and including transition provisions for staff in the sale agreement. This demonstrates your respect for the people who helped build your business.
Ignoring Post-Sale Steps
One of the biggest pitfalls in selling your practice is failing to plan for the period after the sale. Ignoring potential competition issues or the possibility of a buyer default sets you up for legal and financial problems down the road. If you plan to continue working after the sale, draw up a noncompete agreement that protects both parties. Don't be afraid to negotiate on the buyer's proposed agreement to ensure that you can't be driven out of the market. Consider a reciprocal noncompete to provide protection in the case that you regain control of the business after a default. Protect both parties after the sale with confidentiality agreements.
Selling a practice is a momentous event that impacts your financial and emotional well-being. By moving carefully and avoiding common pitfalls, you can create a fast and profitable deal.
Photo courtesy of Shovan Rahman Shuvo at Flickr.com
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