I know for a fact that ProHorizons’ number one competitor in the market is the owner who attempts to sell their tax and accounting practice themselves without assistance. There are many reasons a practice owner chooses to do so: saving money on a broker’s commission, distrust of brokers, they believe they can do so because they have advised clients on sales, or perhaps they feel they already know the buyer. All are valid reasons to some degree. So why should you consider hiring a broker? Let’s take a look.
Selling Your Tax and Accounting Practice on Your Own
To start let’s be clear that, yes, you can certainly sell your practice on your own. Tax and accounting practice owners do it all the time with varying results. Let’s consider your options if you decide to sell on your own. Option one is you believe you already know the buyer and it will be easy to get done and option two is you need to go find the buyer and take on all that effort may entail. Regarding the first option—you know the buyer already—this can be tricky to navigate simply because it does not seem like it should be anything other than easy. The challenge is in the premise that the “buyer” you know is really a ready, willing and able buyer.
We have many clients over the years who “knew” their buyer prior to sorting out they were not the buyer and, only then, turned to us for assistance. In many of these situations the issue lies in leverage because the seller is clearly motivated to sell but the buyer may or may not be truly motivated to buy and often sees themselves as doing the seller a favor by taking the practice off their hands. This does not usually lead to favorable price and terms for the seller, in fact, it usually results in the seller taking on most of the risk in the transaction. We have a saying that “one buyer is no buyer”. Meaning that dealing with a single buyer usually puts the seller in a position of such poor leverage and desperation that it would be just as well not to sell.
Regarding the second option above—finding the buyer and all that effort may entail—let’s be clear it can entail a lot of effort and eventually exposure to all sorts of buyers in the market. For most sellers this is a tricky endeavor of trying to get word out about their interest in selling while trying to keep everyone from knowing they wish to sell. It can certainly be done. But it really needs to be thought through and the seller needs to be prepared to appropriately address any interest that may be shown. All while continuing to run their tax and accounting practice and keeping client services moving along.
I think you see the picture we are painting. It may seem self-serving based on our business, but I think you also can see that it could be a bit of quagmire of issues the seller can find themselves in if they take a known “buyer” for granted or get in over their heads in selling to the market at large.
Selling Your Tax and Accounting Practice Through a Broker
So, what value does a broker of tax and accounting practice hold to make the cost of paying them worthwhile? Well, first regarding what we shared above about selling on your own, we did not even get into negotiating the deal terms, the emotions of selling and buying, and all the issues and pitfalls that often arise as the parties work through the transaction to closing. Most tax and accounting practice owners sell once, while most brokers of these businesses have sold hundreds of practices. That volume of experience is one of the biggest values we believe ProHorizons delivers.
But there is more:
- We are a detached third party.
- We can protect our client’s confidentiality.
- We can work objectively without emotion to achieve the best outcome.
- We have an established database of potential buyers in the market.
- We have systems in place to package, market, and promote sales.
- We have all the documentation at our fingertips, from non-disclosure agreements and templates for letters of intent and purchase contracts to due diligence checklists and sample letters to send to clients to start to transition the business.
- We work with lenders who specialize in tax and accounting acquisition loans.
And, at ProHorizons, we are not a volume broker or a “Match Making” website. We are a full-service boutique broker that takes on a limited number of clients each year. This means that we have the time and availability to work with sellers (our clients) and buyers (our customers) from start to finish to help them navigate the entirety of a successful transaction.
Of upmost importance to your return on a sale though is the ability for a broker to bring multiple buyers to the table. Creating market demand and competing options of who to sell to not only results in the ultimate sales price but also enables the seller to sort through and identify the best fit to provide ongoing service and care to the clients. Many who sell on their own do so to avoid paying the broker a commission, but it is our belief and experience that the prices we arrive at compared to those who sell on the own more than make up for any commission paid to us.
Now, I did make the point in the opening paragraph that distrust of brokers is a motivation to sell on your own. I attribute this unfortunate perspective to several brokers who do not offer full service. Who would rather pursue an immense volume of listings, well beyond a reasonable amount to which they can provide full-service, which forces their clients and customers to navigate much of the transaction without assistance.
If You are Not 100% Confident in Your Ability to Sell – Hire a Broker
There is a lot to unpack in this post and I feel I have been pretty concise and just touched on the key points. In summary, we advise you to seriously explore and weigh your options if you are thinking about selling on your own. It has been our experience, and we endeavor to prove, that the ease of process and the return on the sale, even after paying a commission, is far better when you have the representation of a solid, reputable broker who is going to do the job and help you and the buyer navigate the entire transaction.