Frequently Asked Questions
- How much is my practice worth?
A business is normally worth the amount a buyer is willing to pay, however accountancy practices are different in this instance.
There is a "going rate" with accountancy practices and purchasers have this in their mind when looking to acquire.
The current going rate is between 1 and 1.25 multiplied by the annual recurring fees. Obviously by having a significant number of purchasers chasing your practice, it should push the multiple nearer the end of the going rate. Profitability and productivity is always a major factor in determining your value and there are many other factors in the valuation equation.
This is where specialist advice is required.
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- Can I protect my anonymity for as long as possible?
At Kensington we are acutely aware of the sensitive nature of buying and selling professional accountancy practices and will at all times endeavor to ensure the highest level of confidentiality and discretion.
We will discreetly advertise your firm in the accountancy press, never mentioning your name, practice or location and primarily we will actively try and seek the most suitably matched firm of accountants, for you.
This guarantees your anonymity at all times.
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- Will I be required to work in practice after the sale?
This is a point which is always up for negotiating.
With our experience we like to advise for the seller to be involved with the purchaser for a period between one to three months. The advantage is that this will ensure the smooth transition of your clients to the acquirer. Although a direct contact with the clients is not always encouraged after the sale, it is beneficial to all to know that the predecessor is still on hand if need be.
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- How long does it take to sell a practice?
This normally depends on the urgency of both the seller and acquirer. You can expect the whole process to take from anything from six weeks up to six months but at Kensington we guarantee to respond to all correspondence received within three working days.
This ensures a swift transaction when both parties are willing.
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- What is the best time of year to sell?
The records over the years have shown that there are two main upturns in the market.
The first is between mid February to June and the second is from September to November. Obviously this is the time when vendors come out to sell but the whole sale-acquires process spans over the whole year.
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- What is "Clawback" and how does it protect me?
Clawback is a clause in the sale agreement documentation.
In the event of the acquirer losing the fees in an agreed period of time (normally one year) they deduct a percentage of the remaining balance.
In the event that a purchaser makes a claim under the clawback clause, the vendor has the right of discovery. They may look at the appropriate client files and if necessary, speak to the client and confirm that the loss is genuine.
This is one of the more intricate parts of the deal and requires real understanding and expertise to make sure that not just is the clause fair to all but most importantly that you understand exactly what it means for you.
We will be on hand at all times to explain the smallest query which you might have.
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- What happens about my work-in-progress and debtors?
It is normal procedure for the vendor to collect his own debts and to agree the level of work in progress at the point of completion, for the purchaser to finish off the work in progress and bill it and remit the vendors share at 85% of sale price on an as collected basis.
The 15% is a collection charge retained by the purchaser.
Any under recovery is apportioned.
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- After what period of time can I expect full payment?
This depends on the size of your practice.
For a smaller firm payment is usually received in two stages.
The first payment is upon completion of the deal and the second is on the first anniversary. For a larger firm there are normally three stages of payment. The amount at each stage is open to negotiation and for that reason our staff are highly skilled in negotiating to ensure the best possible outcome for all.
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- I have a few long serving staff and would like them to be taken care of, is that at all possible?
We acknowledge that you have staff that need to be looked after and we will endeavor in our negotiations to have them at the forefront of our minds when dealing with your sale. Most purchasers will want to acquire the services of your staff and you can make it a priority with us when we attempt to find you a suitable match for your practice.
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- A number of clients don’t want to move or the acquirer does not want them will this ruin the whole deal?
This is one of the points where Kensington differs from other brokers. We have a practicing accountancy practice where we will service the clients who either do not want to move to the acquirer or which the purchaser does not want to take on.
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- Can you find someone to purchase my practice premises?
Kensington is well acquainted with professional and successful property businesses around the U. K. and will willingly broker a deal between yourselves and them regarding your premises.
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Download Sale, Merger and Acquisition Documents
Often the answers provide the reassurance needed to enable the practitioner to make the decision to sell. Whatever you decide to do, we can help make the process of selling as easy as possible.
Clearly these questions are addressed to a seller but are also frequently asked by potential acquirers and merger parties. Whether you wish to sell, merge or buy please call us for a confidential discussion during which we will be more than happy to answer any queries you may have.
The FD philosophy of putting the customer first is integral to Kensington's modus operandi, ensuring that you will receive a personal, sympathetic and professional service at all times regardless of the size of your practice.