two writers have similar problems.
by ed mendlowitz
202 questions and answers: managing an accounting practice
i received two related questions, which i’ll answer together.
first question: i am nearing retirement and want to sell my practice to two longtime staff people, but they don’t get along, and i’m afraid to sell to them. what should i do?
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second question: i have a large individual tax practice, but also have an audit practice that is handled by different staff in my firm. how do i sell this practice? none of the larger buyers want the tax clients and none of the smaller buyers want the audit clients.
answer: both questions raise the same issue: the practice is not generally salable to one person. however, they get different responses from me.
first question response: in the first instance with two employees, divide the clients into two groups and offer it to them in that way. let them decide if they want to be partners, or whether each will want to buy half or however you divvy it up. tell them you will want a down payment with a payout for the balance.
there are some dangers here. one is that one, or both, can decide to “steal” your clients and go into business for themselves. another danger is that only one will want to buy and they couldn’t handle the entire practice by him- or herself. another danger is that your division might not be completely acceptable with one or more clients “belonging” to the other group. also, if there is staff it will be hard to divide the staff up, especially if they work on both groups of clients.
some have suggested that if there is an employment agreement prohibiting “stealing” clients or setting a purchase price for stolen clients that will protect you. it will protect you much better than if there weren’t an agreement, but it will only be as good as your willingness to enforce breaches by suing.
second question response: split up the clients and staff and sell it to two separate people. this should be easier to bundle than the above practice because there would be no tip-off to the staff and a much lower risk of loss. presenting it to the clients would be more difficult than if one person acquired the entire practice, but should be managed satisfactorily if the buyers are experienced in taking over practices.