The Business Broker’s Blog
A resource to help you sell your business successfully
In our Blog, we aim to bring you a variety of articles to help you further down the road to selling your business successfully, from
our view on the general economy and its current impact on business mergers and acquisition activity, to our spotlight on the issues
faced by SME businesses and the help available. We also highlight our “Business of the Month” and give advice
on how to prepare your business for optimum sale.
We hope this is a useful resource for you and would appreciate your feedback. As always, please do contact us if you have any questions
Mon 07th May 2018
When is the best time to sell?
This depends on various factors such as your personal situation and general outlook. You (and your partners) may decide that you’ve taken the practice as far as you can and it’s time for fresh ideas and energy to drive it forward. As for timing, a sale will take 2 to 6 months. The self-assessment tax...
Mon 07th May 2018
How are Accountancy firms valued?
The general norm is to base the valuation of an accountancy firm on a multiple of its GRF (Gross recurring fees). One off work, say consultancy, will not count towards GRF unless it can be evidenced that there is a strong chance of repeat business. Typically, as the value of an accountancy firm revolves around...
Mon 07th May 2018
What is the going rate for an accountancy firm?
The market trend has been for accountancy firms and fees to be sold between 0.9 – 1.5 times the annual recurring fees. A quickfire sale with little or no handover period, will as you can imagine fetch a reduced multiplier. An attractive client base and experienced team will attract a higher multiple. There are several...
Mon 07th May 2018
How can I achieve a higher premium for my practice?
Evidence of strong client relationships, low churn rate and internal structures that will remain intact once the vendor has moved on always help drive the price upwards. If the firm specialises in profitable areas, has affiliate partnerships fuelling leads or a healthy referral system these too make a difference. How efficient a firm is maintained...
Mon 07th May 2018
What is clawback?
This is a clause/term in the Sale Agreement that provides the buyer with a certain level of protection should clients leave during the handover period. As payment for the sale tends to be staggered, clawback is normally in operation during this handover period and if triggered affords protection at an agreed ratio proportionate to the...
Mon 07th May 2018
What’s involved in due diligence?
The buyer would be expected to undertake commercial, legal and financial due diligence on the seller. This is usually carried out once Heads of Terms have been agreed and will include a review of the client, sub-contractor and employee contracts, articles of associatioin and ownership, as well as a review of the your systems, processes...
Mon 07th May 2018
What payment terms can I expect?
This is often dictated by the size of fees or practice being purchased and how quickly the vendor wants to exit. The general market trend has been for buyers to make 3 tranche payments. On completion; on the first anniversary and finally on the second anniversary. Strong demand fuelled by cash buyers can push up...
Mon 07th May 2018
How can Hornblower help me prepare for a sale?
We will undertake a no obligation, no cost consultation in the first instance. This helps us understand your aims and objectives allowing us to advise the best course of action. Hornblower also has several pre-sale strategies and growth ideas which we can share with you in order to help you achieve a premium offer. Once...
Mon 07th May 2018
How can Hornblower help me buy an accountancy firm?
The competition for accountancy fees is fierce. Hornblower runs a proactive search campaign for buyers to find “off market” opportunities. For a monthly fee over an agreed period we will conduct a bespoke search. All leads, enquiries and follow ups are handled by us. We will keep you closely informed of the progress and all...
Mon 07th May 2018
Should I consider a share sale or asset sale?
If your accountancy firm is run as a limited company, it will normally be advantageous from a tax perspective to sell the shares of the company. Many buyers will seek to acquire the assets and goodwill of your company in order to avoid taking on any unknown or undeclared liabilities; however, these risks can be...
Mon 07th May 2018
What are your fees?
We operate on a fixed % fee of the sale consideration. We agree at the outset what that will be. Who foots the broker fees will be dependent on whether we have been instructed for a sale by the vendor, in which case the seller pays. Or if we are undertaking a buyer search programme...
Mon 07th May 2018
Does Hornblower require exclusivity on a sale?
From preparing the sale and approaching the market to managing the negotiations and keeping the transaction moving, Hornblower will commit a significant amount of time and resources to the process. We would agree a 12-month exclusivity with the vendor. Full terms and conditions including NDA’s will be provided.
