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Every Accountant that has considered selling their practice asks this question. The answer – I don’t know!

 

I’m being as honest as I can be and if another broker gave you a definitive answer to that question, they’re lying to you!

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When selling a house, a Real Estate agent can give you a pretty good guide as to when the house will settle. Its vastly different with selling businesses, particularly Accounting Practices. You have to consider there are so many more moving parts to your Accounting Practice as opposed to selling a house.

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Lets consider the following steps for an Accounting Practice sale:

 

• Initial chat with me about selling your practice.

• Sign Listing Docs to Authorise TD Mango to represent you in a potential sale.

• I will give you a list of things you will need to provide me – See www.tdmango.com.au/selling-my-accounting-practice  - This list will illustrate your Fees in the best possible light to a potential buyer

• We sit down again and I will interview you to learn as much about the “business” as I can so that I can populate the Business Profile/Information Memorandum

• I will start to market the business to as many relevant Buyers as I can. This will be made from my extensive Database of Buyers and Sellers.

• Potential Buyers will liaise with myself about your Practice where I will share the Business Profile with them.

• The Buyer will meet with yourself, typically over a coffee to gain a feel for your practice.

• They may request additional info from you before committing to a formal offer.

• An offer is made

• Negotiations take place which may include interaction with your respective Solicitors

• A Contract is signed

• Deposit is paid into the TD Mango Business Brokers Trust Account.

• Due Diligence period commences which can take a number of weeks (Subject to conditions in the Contract) – Buyer will request as much information from you as they can which can be quite extensive.

• Due Diligence period will conclude

• There will be a number of weeks between the conclusion of Due Diligence and Settlement. This period is typically used by Buyers to finalise their Finance from Banks etc – again most Business Sale Contract will include “Finance” as a condition of the contract.

• Settlement occurs.

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As you can see, there are many more moving parts to a Business Sale than a House Sale and as such, giving you a definitive timeline from start to finish is impossible.

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Let’s consider some important elements to the steps above that will affect the timeline:

 

Meeting Your Broker For The First Time and Gathering Info – Once we meet for a coffee to discuss the possible sale of your business, I will give you a list of things to gather so we can present the Fees in the best possible light. Aside from giving you the information that I need, its really up to you to analyse your fees. I use the word Analyse as that’s exactly what you will be doing, looking at your fees, drilling down and splitting it up into easy to follow data that will appeal to a potential buyer. The time frame of this step is purely up to you. You will be delving into your fees, making sense of them whilst trying to run a business.

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To give you some perspective, I have had a Principal take 5 months to put this information together for me. This isn’t the norm, nor is the information gathering too intense, but it illustrates that the timeliness of the information that you present is often determined by enthusiasm for a sale.

 

Signing The Contract – This is the interesting part! I have been involved in a number of Contract Negotiations and I can tell you they are never the same.

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Did you know there are three parts to the “Contract”????  Typically the contract is made up of the Contract Business Sale, The Standard Conditions of Sale – Business Sale and the Special Conditions.

Both the Contract Business Sale and the Standard Conditions are pretty vanilla which we – TD Mango Business Brokers – will populate with information. The Special Conditions, however, is left to the Solicitors. Special Conditions may include Retention Clauses, Non Compete, Introductions to Clients, Business Name Transfer, Social Media Accounts etc. The list goes on.

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Again, the time line for this component is really dictated by both your Solicitor and the Buyer’s. I can created both the Contract Business Sale and Standard Conditions almost on the same day we decide to go to Contract, but the Special Conditions need to be written by the Buyers Solicitor. Once the Buyer has submitted their Special Conditions for your consideration, you will need to check things over with your Solicitor. If there are further negotiations between both parties, the timeline will obviously expand.

 

As you can see, the above two examples can greatly affect the time frame of the sale of your Practice. My role is to manage both parties to ensure we can mitigate any delays along the process. By keeping an open channel of communication between both Buyer and Seller will ensure we can keep the emotion out of the process.  

 

As you can see, there are many steps to be performed by both parties. Some Accounting Practices will successfully settle in 3 months – from the very start of the process to the end. Some will take many more months than three, due to factors above.

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Essentially the faster you can have your Information ready, the faster it will settle. Organising your solicitor in advanced will certainly aid in the pace of the process and ensure a smoother Settlement.

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