When Is The Best Time To Sell My Practice? (Sponsored by Poe Group Advisors)

We get asked this question a lot by potential sellers. Second only to how much their practice is worth. But, similar to questions about practice value, the answer really depends on the situation. We’ve described four timing categories below to help you.

Personal Timing

Although timing the market may seem to be the most important consideration when selling your practice, we find that the owner’s own timing is usually the best place to start. Have you given any thought to how long you would like to work? Do you like what you do? Do you have goals for after the sale?

Consider if the expected value of your firm aligns with your expectations for retiring or funding the next business venture. Maybe your trigger point for the right personal timing is just the right sales price. Sellers feel more confident and sit in a better negotiating position if they don’t have to sell for the highest price. The bonus is that a financially secure seller tends to sell for a higher price anyway!

Sometimes life circumstances change your timing and planning a sale sooner rather than later can make all the difference in getting the best price and terms for your practice. Our Succession Planning Guide below is a great place to start for practice owners planning their future.

Market Timing

This is usually what people mean by timing. The assumption is that there are times of the year (seasonality) or movements in the market (trends) that make it better to sell at one time versus another. To some extent, this is true. Selling a tax practice during tax season may have a smaller buyer pool than in the summer. However, we rarely see an issue with seasonality compared to a life decision to sell. At most, it might affect the outcome by a few months.

Market trends are a bit different. They tend to last for longer than seasonal markets but may or may not affect a decision to sell. Overall, the market is strong for practices right now. This has been so for years and we don’t see this changing anytime soon.

There are also trends relating to the specifics of a practice. Cloud practices are very much in demand, personal tax practices are not. Firms with cash flow close to 50% after addbacks and owner hours under 2,000 are always easier to sell than those with worse margins.

However, the market is typically about the buyer pool, and what buyers want. Our Cloud Firm Pricing Factors Report and our CPA Valuation Key Factors Report below will assist any bookkeeping, accounting or CPA practice seller who is looking to understand the market and how their practice is valued by it.

Practice Timing

Practice timing is about whether your practice is ready to sell. This has to do with practice quality. Even if you are ready to leave your practice, and it’s a seller's market, a quality practice will sell for more than a mediocre one. It will also sell easier and quicker. It is about understanding what buyers want (from our guides in the previous section) and determining whether these are true of your practice.

Do you need to make improvements? Do you have enough time to improve your practice before you are ready to sell? If not, you need to be realistic about the price and terms you may be able to receive. If you have time, are there small changes to make now that will make a big difference a year or two down the road?

As a bonus, improving the quality of your practice will make it a better practice to run and may convince you to keep working a little longer because you enjoy it!

We created the Accounting Practice Academy to help practice owners run profitable and enjoyable practices. It also is beneficial to the owner preparing for an eventual sale. We help them get there faster. For more information, see below.

Business Opportunity Timing

In some cases, your firm may be the perfect business opportunity for another practice and they may approach you even if you haven’t yet considered an exit. This can be especially true for larger firms attracting Private Equity or cloud bookkeeping firms where growth potential is exponential. Adding this service through acquisition is faster and more profitable than beginning from scratch.

If you have received an unsolicited offer, our recommendation is to still consider your personal timing and exit goals. Private equity firms are increasingly reaching out directly to firm owners, often with compelling offers and a sense of urgency. What these buyers count on is that you won’t create a competitive process and that they will have the right to exclusively negotiate a deal with you for extended periods of time to get more favourable price and terms for themselves. Owners can capitulate when they don’t have backup buyers. Our Exit Strategy Calls can provide much-needed information and perspective. You can book a call with the link below.

Request an Exit Strategy Call

The important thing to realize is that there is seldom, if ever, perfect timing, but proper planning can equip practice owners with the knowledge and tools they need to make the right selling decision for them. At Poe Group Advisors, we have been selling firms for more than twenty years, and we are happy to be a resource.