If you are considering selling your Accounting or Tax practice, you most likely have a few questions. From your office equipment to all the necessary legal documents, there are a few things a seller will need to consider.
Here, we break down some of the most frequently asked questions by Accounting & Tax practice sellers.
Can I Sell A Portion of My Practice Only?
Yes, you are able to sell just a portion of your practice. You will need to make a list of the clients you wish to keep and will need to keep their financial data separate when placing a valuation on the firm.
Additionally, you will need to prepare an exclusion clause in the sale agreement that covers the clients you are retaining.
Do I Need to Guarantee Client Retention?
It is not mandatory to guarantee client retention. Of course, a buyer will want to know that the clients they are buying are viable and committed clients. Buyers are willing to pay more for a guarantee. If you are in doubt of a buyer’s ability to retain clients, you should consider another buyer.
Do I Need to Sign a Covenant of Non-Competition?
If you are retiring or moving, it’s not much of an issue. If you want to establish a new practice, determine a mile radius that would be reasonable, maybe 50 miles from your existing practice.
Some sellers choose to stipulate in the sales agreement that they will not accept any previous clients for a period of 5 years. By signing a covenant of non-compete, you can still work in another practice in the industry, but you may not contact any of your old clients.
Is a Long Term Lease Favorable?
Not always. Some leases can have too long of a term for a buyer. Ideally, you should consider having a month-to-month lease and avoid any long-term leases. Additionally, you can consider renting your own building to the buyer at a favorable rate, which can help increase the final sale price of your firm.
Should I Stay On For a Couple of Tax Seasons To Assist With the Transition?
For a larger practice, it can help make the transition process smoother if you stay on for an additional tax season to assist the buyer. However, if the practice consists of just 1 preparer and some seasonal help, there may not be much for you to do. Additionally, there may not be enough revenue to support you and the new owner.
Should I Replace Equipment or Upgrade Software?
It is best to avoid signing any new leases or buying any large or expensive pieces of equipment before you sell your practice. This should be the buyer’s decision. The buyer may have their own resources they wish to use.
Will My Clients Be Willing to Transfer to Someone Else?
If the transition is handled correctly, most clients will stay on with the new buyer. Your clients are relying on you to ensure that they are well cared for.
The knowledge that their files will be maintained by the buyer and that you have reviewed their unique situation with the buyer will give them the boost of confidence they need to give the buyer a try. Be sure to let your clients know that the new owner will still have access to you if the need arises.
When you decide to sell your accounting or tax practice, you will likely have some questions. The team at Accounting & Tax Brokerage can answer any questions you may have about selling your accounting or tax practice. With over 50 years of experience, we can help you find the right buyer for your firm that will continue to take care of your clients just as you have.
To learn more, contact us here or call us for a no-hassle consultation at (855) 428-2225.