1. Understand why you are selling the business - This may sound simple but you need to be fully commitment and understand what you plan on doing after the sale. Are you going to move somewhere warm and relocate, do you want to start another business, are you selling just for the money? Buyers and lenders will expect the seller to sign a non-compete agreement at closing which will prohibit the seller from servicing these clients and earning money. This is okay if the seller plans to retire or relocate, but if you are just selling the accounting practice to earn money then what are you going to do when that money is used up?
2. Understand the value of your practice - The OLD rule of thumb is 1.0 x’s annual revenues based on a 5 year client retention clause. This has changed and practices are sold all day long all throughout the country a variety of different ways. A professional accounting broker can help you understand and give you a better idea of what you can expect to get from your practice and most of the time for free of cost. The value of the practice will differ and will be based on a plethora of different items that will be unique to each business so there is no generic answer for what a practice is worth.
3. Understand your numbers - Obviously keeping clean books and organized records will help sell the practice and also help the buyer feel more comfortable in their decision to purchase. Also if the buyer is going to use an outside source for financing, the lenders will also require accurate financials and tax returns in order to approve the deal.
4. Understand it is business as usual - Just because you are trying to sell the business doesn’t mean you can take a break from the business. If you hire a professional accounting practice broker, such as Naab Consulting, to assist you with the sale it will make this task much easier. We can confidentially market the practice for you and bring you in only qualified leads. This will obviously save you a lot of time of which can be devoted back into the business. If you are trying to sell on your own, you will need to be able to not only work on the business but answer dozens of inquiries and questions from outside buyers, of which many of them are probably not qualified to purchase or just kicking tires. We estimate that for every 10-15 inquiries, only about 1 candidate would be qualified to purchase the practice they are trying to buy.
5. Understand the purchase price - Using a professional accounting broker will help to make sure you are getting market value and fair deal for your practice. If you are attempting to sell without a broker you need to be realistic with the purchase price and terms. The practice can’t be overpriced or no one will be interested and obviously you don’t want to leave money on the table as well. Every accounting and tax practice is unique and has its own client base. This makes each practice a little bit more difficult to value so be careful in finding a good price to sell the practice.
