Exploring Flexible Succession Strategies in the Accounting and Planning Marketplaces

Business Brokering Wednesday 24th of January 2024

In today's dynamic accounting marketplace, vendors contemplating retirement or looking to scale down their involvement face a landscape rich with opportunities.

The current market is defined by buyers who are increasingly willing to tailor their acquisition strategies to meet the unique needs of sellers. This flexibility is a game-changer for vendors, providing them with a platform to explore various permutations and combinations of selling some or all of their practice. 

As a vendor, understanding these options is crucial for a successful transition whether it involves selling 100% equity, engaging in a merger, or segmenting off parts of the business.

Understanding the Versatile Marketplace

The traditional approach to selling an accounting practice often involved a one-size-fits-all model. However, the current market is far more nuanced. Buyers are now open to a range of scenarios:

Complete Equity Sale with Quick Exit: This model suits vendors who wish to sell their entire stake and move on swiftly, typically within six months. It's ideal for those seeking immediate retirement or a career change.

Total Equity Sale with Ongoing Involvement: Some vendors may prefer to sell all their shares but remain involved in the practice. This approach can be particularly appealing to those who wish to ensure a smooth transition of their client relationships and maintain an advisory role.

Partial Equity Sales: This option is for those looking to step back gradually. Vendors can sell a portion of their equity to an individual or a firm, leading to an equity partnership or a merger. This way they can reduce their workload while still retaining a stake in the business.

Segmented Business Sale: Some vendors might opt to sell off a particular segment of their business, such as the financial planning division, while retaining other parts like the accounting sector. This strategy allows for a focused and stepped approach and can be ideal for those looking to specialise or reduce their scope of work.

The Importance of a Tailored Approach

For vendors, the flexibility in the market means there is no single “correct” way to approach your sale. It's vital to consider your personal and professional goals when deciding on the structure of the deal. Do you seek a complete departure from the business, or do you wish to maintain some level of involvement? You should select a transaction model that considers and delivers on your objectives.

Engaging with the Market: A Strategic Process

Understanding that the market is receptive to various transaction types is only the first step. Engaging effectively with potential buyers is crucial. Here are some strategies:

Exploring and Discovering Your Objectives: Entering the market with a fixed set of goals is not always necessary. In our experience at Practice Exchange, we've found that many practitioners begin the M&A process without a defined and detailed outcome in mind beyond the overall goal of “getting the sale done”. This journey becomes one of discovery, revealing enlightening and often unexpected pathways. Whether it leads to immediate retirement, a gradual transition, or a complete restructuring of your business, the M&A process can open your eyes to a range of possibilities you might not have considered.

Professional Representation: The complexity of M&A transactions in the accounting and planning sectors demands professional representation. It's crucial to engage with someone who not only understands the intricacies of the market but also has a deep, personal understanding of practice life and operations and the M&A process. We’ve seen too many sad examples of do-it-yourself outcomes that were penny-wise and pound-foolish, where practitioners had to settle for sub-optimal outcomes or even spiked their deal entirely (and their goodwill value along with it).

Understanding the Marketplace:  Engaging with a consultancy that possesses not just professional expertise but also a broad market reach is vital. Put simply, broader market reach offers not only more buyers, but more options for the structure of your transaction. Our understanding of current market trends and connections can provide valuable insights and opportunities, significantly influencing your decision-making process and transaction outcomes. Here is an article we have previously written on the topic of the importance of market reach in order to maximise your outcome.

Flexibility and Openness: Be open to different transaction models. A buyer who might not be the right fit for a total buyout might propose an appealing partial sale or merger.

Navigating the Negotiation Process

It's not all about the price. The terms of engagement post-sale, transition support, and the future of your employees all need to be considered, valued and factored in.

Negotiating the terms of the sale is a critical phase. A well-negotiated deal considers all these aspects, ensuring a win-win for both parties.

In Conclusion

I have been advising in the M&A sector since 2001, and the current accounting market offers an unprecedented array of choices for vendors aiming to transition out of practice. 

The key is to approach the market with an overall understanding of your objectives, an openness to various transaction types, and a readiness to engage in a strategic negotiation process. 

Remember, the pathway to your next chapter is not necessarily linear; it can be a spectrum of possibilities tailored to your unique professional journey.

For help navigating your options please contact me directly. You can schedule a call with me via Calendly or contact me 1300 722 452 or mark@practiceexchange.com.au

Mark Witt CA

Mark is the Head of Brokering at Business Exchange with over 20 years experience and 400+ completed transactions


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