Succession can take many forms depending on your situation and goals. Considering a merger can give you options beyond a simple all-or-nothing sale.
When we ask practitioner why they’re considering a merger they a likely to provide one or all the following three reasons
- They’re finding that life as a sole operator too hard;
- Finding it impossible to attract good staff; and
- They are not ready to retire yet but are looking for better work/life balance
Consider the situation of a sole operator, overloaded and having difficulty finding reliable staff. Or, at the other end of the spectrum, a proprietor who is not ready to retire yet, but perhaps wanting to wind down and concentrate on the kind of work they enjoy.
When we talk to practitioners about mergers we discuss a range of options:
- Straight Merger
- Merger with partial divestment of your equity
- Staged purchase of your equity
- Purchase of whole of your firm with you staying on indefinitely
- Purchase of whole firm with you staying on just for the transition period
Options 1 and 2 tend to be most appealing to the practitioners in the 30-50 age bracket (unless the practitioner is considering a career change.)
Practitioners in the 50+ age group who are investigating mergers are seeking two things:
- To secure the value of their current practice
- To secure the opportunity to work on – but only in a role that includes their preferred types of work
Quite often their main concern is that they if they sell their equity interest, they’ll lose the opportunity to earn ongoing income doing what they enjoy most.
The reality is that there are two types of firms – those that are looking to transition to partner out the door as soon as practicable, and those that are happy for the partner to continue on indefinitely (albeit with a reduced work load/hrs.)
It is our experience that many buyers prefer to have the practitioner stay on indefinitely working say 2-3 days a week and having a couple of months off a year for holidays. We're happy to discuss the particular options that are available to you.
The good news is that the current market is quite strong with regard to merger opportunities – we have numerous interested parties registered with us at Practice Exchange, and that bodes well for practitioners willing to consider and benefit from a change.
If you’re in this position, or if you just want to talk about what might be possible, you should get in touch with us. We’re happy to help.