Practitioners who haven’t given a lot of thought to an exit strategy are now realising decision time is rapidly coming closer.
Run your mind around the following concentrations of risk:
- Key Staff
- Key Clients
- Your state of health
- Income and disability Insurance cover expiring.
- Ability to attract new clients as you used to
- Advances in technology e.g. Xero with its feared fee erosion effect
- Lease expiring?
The downside from being exposed to the above, extended over the next few years ahead, can be very real and needs to be weighed up with what your practice could realise in value now.
Our company has many potential buyers. However, there is always a relatively smaller number of practitioners looking at selling.
There are buyers with existing practices who will willingly pay a premium price where there own circumstances enables large increases in their bottom line by merging your fees with theirs, thus so recovering that premium in quick time verses say a buyer just starting up.
Also a buyer sometimes willingly pays a premium if they want to stop you selling to a competitor
Accounting Practices Ltd administer a database of potential buyers and sellers NZ wide on a confidential basis and have available consultation support using experienced past practitioners who have been involved in purchase / sales a number of times with their own “skin in the game”.
Where is the current market in valuation terms you might ask?
Comments from consultants with Accounting Practices Ltd say that many approach the market and think the going rate is x cents per dollar fees. There is however no commercial logic to working within a range of say 70 to 90 cents, without consideration of the potential benefit to the purchasers bottom line, of what may be a golden opportunity before them, as stated above.
Every sell or buy situation has different circumstances and for each case valuation can be so different if measured against an arbitrary cents in dollar approach.
Contact us with planning your exit strategy. Don’t delay! Even just having us exploring ways of capturing the value in what you have got as you you may face the risk of that present value diminishing as years ahead tick by.
Riki Sila, Executive MBA
Director of Accounting Practices
022 0432 880 or 09 600 2092 and talk to one of our Professionals.