Hi and welcome to the Key, an informative e

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Dedicated to selling Accountancy Practices
in Melbourne
The
Key
Winter 2013
Welcome
Hi and welcome to the Key, an informative e-newsletter
keeping you updated on what is happening in
Melbourne with the sale of external accounting
practices.
Market Watch
Contact Us:
2/275 Elgar Rd
Surrey Hills VIC 3127
T: 03 9898 0711
F: 03 8678 3008
www.apnetwork.com.au
[email protected]
Frequently Asked Questions When
Selling An Accounting Practice
As I am talking to Accountants quite
regularly these are the common
questions that are asked.
How much is my Practice worth?
In today’s market thanks to the GFC,
there are more buyers than sellers.
Many practitioners have postponed
retirement to top up their
superannuation. So while demand
exceeds supply, the current trend for
practices with a fee base less than 1.5
mil with minimum I.R’s, you are looking
at selling for 100 cents to the dollar. For
practices with I.R’s, they are fetching
from 65 cents – 75 cents to the dollar.
However if there is a Financial Planning
sector attached this increases the price.
So you have finally found a great Practice to purchase. You
have agreed on a price, there is a positive synergy between
yourself and the vendor. It’s the perfect location, great fee
base and you both use the same software, hard work all
complete? Well, not quite!
In todays market, because there are not many practices for sale
it’s easy to become complacent about due diligence. But this is
the time to take out your microscope and examine exactly
what you are getting. Here are the Top 10 areas that need
attention
1. Be clear on the quality of work that goes into client
files, the profitability of the firm and the opportunities
for growth
2. Look into human resource issues. Each employee’s
skills and future goals. Look at their length of service,
what they do, their salary and charge out rates, their
entitlements, next review date and possible increments
expected.
3. Find out if there are any employees who have close
contact/links with clients. This could be a problem if
the employee leaves and takes the clients with them.
4. Go over all leasing information for the premises and
Of course, when valuing a practice there
are many factors that weigh in.

Debtors

State of WIP

Quality of Staff

Quality and Tenure of Clients

What the fee base is made up
of
I plan to sell to one of my employees,
how can you help?
You’ve found the buyer, that’s great. We
can assist with drawing up the contract,
the paperwork and making sure the
transition is done as smoothly as
possible.
How do you find buyers?
At APNetwork, we have the largest
database of Melbourne buyers who have
registered with us exactly what they are
looking for. We are talking to
practitioners all the time and we know
the difference between a genuine buyer
and a time waster.
How long does the whole process take?
Once the Practice Profile Report has
been completed, the whole process
takes about 3-4 months depending on
the time of year. If you know what type
of buyer you are looking for, finding the
right buyer in the past hasn’t taken
longer than 2 weeks.
How much information is disclosed to
perspective buyers?
Our client’s confidentiality is of utmost
importance. All perspective buyers must
sign a confidentiality agreement before
they receive the Practice Profile Report.
Our reports do not contain specific
information relating to the identity or
location of the vendor. Not until the
perspective buyer is interested in
meeting the vendor are these details
revealed.
How does the future look for practice
sales?
It is more than likely this sellers market
will soften in the coming months/years
and become a buyers market. However,
there are a couple of trends that may
prevent this from happening.
1. Uncertain economic
conditions which may force
practitioners working well
into their 70’s and 80’s.
2. Generation Y continuing to
be more entrepreneurial in
their efforts to grow
organically.
5.
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equipment and ensure all software is all licensed and
up to date.
Examine the debtors, the payment terms and problems
in receiving payment.
Obtain a list of the clients that have been lost in the
past 12-18 months and ascertain the reason why.
Examine the Annual financial statements, in particular
the cash flow analysis.
Have they been audited lately? Was there any
recommendations made to rectify deficiencies found in
the practice.
Review the top 20 client list and compare it to the
previous year or 2. Is there a decline or increase in the
number of larger clients – this indicates the general
trend of sales.
Review all invoices paid to law firms in the past 2 years
and get verification that all legal issues have been
addressed.
Practice Succession Plan
If you are in the age bracket of 55 to 65 you should be
having an initial no obligation chat with myself to at
least get some perspective and a plan to sell your
practice. Our Practice Succession Plan is specifically
built for Accountants in public practice who are looking
to sell their practice in the next 5 years. We do not do
estate planning or business improvement, we are totally
focused on maximising the value for your practice by
taking significant steps to prepare your practice for
sale.
Having a consultant such as myself to systematically
guide you through this process will make sure you stick
to the Practice Succession Plan and will help you focus
on it over a controlled period rather than rushed over a
2 month period when you suddenly feel that you have
had enough.
Jacinta Hewer
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