5 steps to align a firm sale with your aspirations

Executive summary

• Know the value of your firm by having a formal valuation done by a third-party professional; otherwise, you could leave money on the table.
• Ask for advice from an attorney, advisor, or coach. Take their advice seriously.
• Put everything in writing; if it is not written down, it does not exist.

The end of the year is prime time for selling a business, and that includes tax and accounting firms. If you are in the market to potentially sell your firm or acquire a firm, then it makes sense to proactively consider the process in light of your ultimate goals or aspirations.

Whether you are on the seller or buyer side of the equation will determine how you will evaluate any potential transaction. These 5 steps can help ensure any sale that occurs serves your short- or long-term objectives:

Step 1: Create a list of desired outcomes for the transaction. It is important to do this when you are in a calm state, not when you are feeling burnt out or at peak stress levels. You likely have a monetary goal for selling your firm and a top threshold for what you can, and should, pay for an acquisition. Make sure to write this down in a moment of truth. You will want to refer to that number later. Also, make note of the role you want to have as a former owner or potential new owner.

Step 2: Know the true value of your business. The best way to know the true market value of your business is to have a formal valuation performed. However, be sure to think about all of the other angles that could increase the value of your business. What are the truly unique assets of your business? Do you have intellectual property? Is there a signature process? Do templates or contracts exist? These assets can all have tremendous value, so don’t undervalue them.   

Step 3: Ask for advice—and take it. It is nearly impossible to be able to take an objective view of your own sale or purchase. That’s why hiring a third-party professional with experience is invaluable. Consider hiring an attorney, and an advisor or coach. Ask for recommendations to help you make a good selection. The cost of this can be bundled into your purchase agreement. 

Step 4: Make your decision stick. There is usually quite a long road of meetings and due diligence before a transaction is finalized. Throughout the process, there will be ups and downs, so be prepared! In addition, refer to the number you wrote down in step 1 so you can stick to it as negotiations may start to wear you down. Be unwilling to budge from that initial number unless your objective, third-party business valuation tells you otherwise.

Step 5: Put everything in writing! There are eight words you need to take to heart in the final stages of any sale or acquisition: If it is not in writing, it does not exist. Being realistic, if it is not in writing, it isn’t happening and no one is legally bound to do anything beyond that. Lean on your attorney to make sure all of your interests and key negotiation elements are included. Be sure to read it yourself.

Keep the steps above in mind as you execute your firm sale or acquisition strategy

The process of determining whether you want to sell your firm or purchase another practice can be overwhelming, especially if the opportunity arises during the rush of year-end. The steps above can help you reduce the stress and anxiety of the decision, no matter what side of the table you are sitting on. If you are not in the market right now to execute a deal, use them as food for thought to align your action plans for the coming year with the ultimate goals you have related to the future growth or succession of your practice.

I would be more than glad to answer any questions you have; simply leave a comment below and I will respond.