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Who will buy my practice?

Exploring options for succession planning.

Who will buy my practice?

This is a question that is increasingly being asked by practitioners around the country. With the average age of public practitioners now well over 50, an increasing number are contemplating how they will “succession manage” their practice. For many the focus is on the capital value of the practice and how they can extract this capital value to assist in their retirement planning. Succession though, isn’t always about retirement. There are a whole range of events that can be a catalyst to the sale of a practice.


The Changing Landscape of Practice Succession: Demographics and Market Shifts

Let’s look at accounting firms. The demographics of public practice in Australia paint the picture. There are around 12,000 public practice firms across Australia, of which 90% are represented by sole practitioners and two-partner firms. Add to this the aging of the profession and you have many small practice firms delivering similar services to a similar client base. These firms are typical of small business in Australia.


For Financial Planning firms, the story is similar. According to the FPA, in June 2019 there were 26,100 financial planners in Australia, an increase of around 45% on a decade prior to this. Financial planner numbers are expected to fall to around 20,000 by 2024 as the market shifts to a new dynamic with Industry Funds servicing the vast majority of Australians’ retirement savings accounts and financial planners moving to a true profession and servicing those consumers who are willing to pay for advice. For those firms who target the right client, asset values will be sustained into the future with strong demand for client bases with a model that is built on a sustainable income/profit. This makes succession and the ability to attract incoming talent promising.


Sale, Merger, or Internal Succession?

So where does this place public practitioners looking to plan and implement their succession? Your options are wide but limited. The main options are:

  • Sale of a fee parcel
  • Outright sale of the firm
  • Merger
  • Sale to existing partners
  • Internal succession
  • Introduction of new partners
  • Orderly winding up

 

Each of these options (except the last), will likely generate a return of working capital and also a return on your investment in plant and goodwill. The critical factors will be timing, pricing, and planning. Your approach to the sale will vary depending on which option you are planning to pursue. The difference between taking a structured approach to this and a last-minute rush to find a buyer can be significant.


Structured Approach vs. Last-Minute Rush

Planning the sale of your practice is about maximising the value of your asset and managing an orderly transfer of your professional obligations in respect of your clients and your team. Given the expectation of an increasing number of firms and fee parcels coming on to the market, without question we will see buyers gravitate toward value.


A clear message is that we should all be planning for the ultimate sale of our firm irrespective of whether we expect to be in practice for 2 or 22 years. Every firm should be developed with a view to the ongoing succession and ultimate sale of the business.


The great thing about doing this is that you build a strong and profitable business from day one. And when the time comes for you to move on, you have an asset that is attractive in the market and one for which there should be strong demand.


Secure Your Legacy 

Are you at the career stage where you're contemplating the future of your accounting or financial planning practice? Our coaches are experts in planning and managing succession, with a unique perspective gained from owning and successfully exiting their own practices, as well as coaching others to do the same.


We understand the unique challenges and nuances of succession planning in the professional services industry. Whether you're fine-tuning your vision for future chapters or pondering what you'll leave behind, our one-day workshop, "Pathway to Succession and Exit," is your compass. Secure your spot here.

Are you ready to plan for your best?

Over two days of hands-on coaching with our expert team, you’ll walk away with an airtight business plan that will guide and motivate you to achieve more than you thought possible in your business and personal life.

Melbourne: 30 - 31 May

Brisbane: 6 - 7 June

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