Top tips to enable you to buy your dream accountancy practice

Colleagues with computer
Steve Deutsch Wesleyan Bank image By Steve Deustch, CEO of Wesleyan Bank

12 June 2018

Steve Deutsch, CEO Wesleyan Bank, outlines the key considerations for senior accountants considering taking on their own practice.

Purchasing an accountancy practice is arguably more competitive today than it has ever been. Senior professionals face high demand from like-minded others to achieve their ambition of running their own business amid growing interest from large corporate firms who are motivated by mergers and acquisitions.

This is due in part to the UK’s status as a global leader in accounting services, which saw the profession contribute £17.2bn to UK GDP in 2016 according to research compiled by the Consultative Committee of Accountancy Bodies (CCAB). In addition, a report by Source Global Research has revealed that the consulting business of accountancy firms in the UK made 40% of all revenues earned in the country’s consulting market, which grew by 7.3% to £3bn in 2017.

Despite the accountancy sector facing a potentially turbulent period due to global economic instability and Brexit, forward-thinking firms who have implemented modern cloud-based technology and can demonstrate robust succession plans are well placed to capitalise on a buoyant marketplace.

However, buying your dream accountancy practice may not be as straightforward as you think. But by conducting the following due diligence and surrounding yourself with trusted advisors, you will be in a stronger position to realise your aim.

1. Know what you are looking for

Are you seeking to buy a practice with complementary skill sets and accounting specialisms to that of your own, or are you looking to gain market share in a specific industry sector or geographical region? Analysis produced by the CCAB has highlighted that the biggest buyer of accountancy services are typically firms situated in the financial services and legal sectors. However, it’s important to choose a practice that can offer the right blend of staff and services to enable you to improve your offerings to clients and grow your business.

While it may be tempting to purchase a distressed practice at an attractive price, always seek trusted advice and evaluate whether it is worth the risk by considering the goodwill value of the business and staff and client retention levels.

2. Create a robust business plan 

Your business plan should represent a blueprint for success and will be analysed with a fine tooth comb by financial lenders who will be looking for tangible evidence that you are worth backing. Prospective buyers should familiarise themselves with the previous financial forecasts of the practice they wish to purchase, in addition to analysing the profit and loss figures to build a comprehensive picture of the business.

Your business plan should also include contingency measures in case the practice’s income declines and assess what impact this would have on your personal finances in the event of you taking out a long-term loan.

3. Don’t jump to conclusions

Due-diligence is vital and allows the buyer to address any queries about the practice. It is important for the purchaser to forget what they may know or may assume and instead formally gather information that can then be relied upon pre and post-sale. Things to scrutinise include potential compliance issues, the competencies and career paths of existing staff, the number of existing clients and new clients gained in the last two years as well as revenue, profitability and cashflow performance.

Furthermore, you should check whether the firm has appropriate levels of professional indemnity insurance (PII) cover and if the business has been subject to previous claims.

4. Get the right support 

The process involved in purchasing an accountancy practice can be complex, yet many accountants still opt to appoint generic financial lenders and solicitors to save costs and encounter mixed results. To avoid delays and swiftly overcome any unforeseen issues which may materialise, it is recommended that both the buyer and the seller appoint specialist legal and financial practitioners who intrinsically understands the accounting industry.

Specialist financial lenders, such as Wesleyan Bank, offer step-by-step support to accountants looking to buy an accountancy practice by providing flexible loans over seven to 20 years to tailor a solution for practice acquisition that suits your bespoke requirements to ensure a seamless process. Specialist alternative finance providers also provide ongoing financial solutions to enable practices to grow long after the initial sale is over, including funding to support investment in new technology and associated IT software and services, practice refurbishments and relocations.

Buying or selling an accountancy practice comes with risks and rewards. From determining the right business model and pinpointing the best location, several personal and legal factors must be carefully considered before you take the plunge. Choosing a financial partner with specialist knowledge of the accountancy sector can help prospective business owners to enjoy a successful career with financial stability and avoid making a misinformed decision they may ultimately regret.

5. Choosing a financial partner

Specialist financial lenders, such as Wesleyan Bank, offer step-by-step support to accountants looking to buy an accountancy practice by providing flexible loans over seven to 20 years to tailor a solution for practice acquisition that suits your bespoke requirements to ensure a seamless process. Specialist alternative finance providers also provide ongoing financial solutions to enable practices to grow long after the initial sale is over, including funding to support investment in new technology and associated IT software and services, practice refurbishments and relocations.

Buying or selling an accountancy practice comes with risks and rewards. From determining the right business model and pinpointing the best location, several personal and legal factors must be carefully considered before you take the plunge. Choosing a financial partner with specialist knowledge of the accountancy sector can help prospective business owners to enjoy a successful career with financial stability and avoid making a misinformed decision they may ultimately regret.


Find out more about our specialist support

Visit Wesleyan Bank


About the author

Steve Deutsch joined Wesleyan Assurance Society in October 2005 following 19 years in a variety of roles at Lloyds TSB. He was appointed Chief Executive to Wesleyan Bank in May 2015, having previously been Managing Director of Wesleyan Bank since October 2012. Prior to that Steve had been Operations Director, Commercial Director and Chief Operating Officer-Sales.

This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.

Topics

  • CA life

Previous Page