You might decide to buy an existing accountancy practice rather than start your own venture from scratch. Buying a going concern can mean that:
- the premises, business equipment and office fittings are already in place
- there are established clients and recurring fees
- the business can generate income immediately
- the business has a track record, which can help if you are looking for finance
- staff may already be in place
However, look critically at any practice that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.
Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the practice. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.
Other matters to consider include:
- the state of the premises, fittings, equipment and so on. Will you have to spend money refurbishing or replacing assets
- the client database. Are all the clients listed still being dealt with or are there many 'ghosts'. Think about the client profile - you might not want the majority of your clients to be small concerns that have difficulty paying realistic fees
- existing staff rights
- how to retain key personnel once you've taken over
- does the business owe money that you will be responsible for
- if you are paying for goodwill, to what extent does this depend on the skills and personality of the seller
Look critically at the business accounts for the past three years and consider the selling price in the light of what the accounts reveal. Make sure you budget for professional fees such as legal fees and valuation and survey costs.