We include all our law & accountancy firm sales advice and sale updates here. It includes articles from Ten Percent Legal Recruitment, Ten Percent Financial Recruitment and our blog Legal Recruitment.
- Information to Prepare when Selling a Law Firm – https://www.ten-percent.co.uk/questions-to-ask-yourself-when-preparing-for-the-sale-of-a-law-firm/
- How to Sell a Law Firm – A Guide – https://www.ten-percent.co.uk/how-to-sell-a-small-medium-sized-law-firm-by-jonathan-fagan-ten-percent-legal/
- Valuing Accountancy Practices https://www.tenpercentfinancial.co.uk/how-to-value-accountancy-practices-for-sale/
- Succession planning for law firms May 16, 2022Finding partners to carry on a business is incredibly hard to do. Setting up and running a law firm in theory could not be easier at the moment and junior ...
- How not to offer equity to a junior partner or member of staff April 14, 2022How not to offer equity to a junior partner – an article by Jonathan Fagan Business Brokers for all professional firms worldwide.
- What is my law firm worth? April 14, 2022This is one of the hardest questions to answer if you are the owner of a business and need to come up with a figure as to the potential value ...
- My PII premium has rocketed and I don’t know what to do – help! March 25, 2022What to do about high professional indemnity insurance premiums. Article by Jonathan Fagan Business Brokers. UK specialists.
- How do I increase the value of my law firm? March 13, 2022We regularly prepare valuation reports for law firms of all shapes and sizes across the UK, and one of the sections of our reports is how to increase the value ...
- Solicitors – how to plan a successful retirement March 13, 2022This article is a guide to thinking about retiring and what factors you will need to take into consideration at the outset. Written by Jonathan Fagan Business Brokers for solicitors ...
- Valuing Law Firms and Accountancy Practices – a Business Broker’s Experiences February 28, 2022Law Firm and Accountancy Practice Valuations – a business broker’s experiences. An article by Jonathan Fagan Business Brokers, specialists for law and accountancy.
- Law Firm Sales – making sure you are not the asset for sale December 8, 2021Law Firm Sales – making sure you are not the asset for sale – an article by Jonathan Fagan Business Brokers.
- My PII has shot up this year – is my law firm worth anything still? November 16, 2021My PII has shot up this year – is my law firm worth anything still? Yes is the quick answer in certain circumstances!
- A Rough Guide to Law Firm Valuations October 26, 2021Valuing law firms is a bit hit and miss. An article with example valuations by Jonathan Fagan, MD of Ten Percent Legal Recruitment and Jonathan Fagan Business Brokers.
- How to buy a solicitors firm for nothing October 26, 2021A guide to purchasing a law firm without spending any money – click the link below for the full article by Jonathan Fagan, MD of Ten Percent Legal Recruitment and ...
- Selling a law firm – whats it worth? October 26, 2021What are law practices worth – an article by Jonathan Fagan, MD of Ten Percent Legal Recruitment and Jonathan Fagan Business Brokers.
- Can you sell a law firm to a non-solicitor? October 26, 2021There is a way of selling a law firm to a non-solicitor buyer and that is with the use of an ABS (Alternative Business Structure). Article by Jonathan Fagan, MD ...
- How to make an offer to buy a law firm October 26, 2021We often see the approach of both sides to each law firm deal. These are our tips for achieving a sale or purchase. If you read no further, the key ...
- Do law firms have a sale value? October 10, 2021I was recently surfing the internet to see what articles are out there on law firm valuations and selling solicitors’ firms and was surprised to find a number of advice ...
- Unrealistic law firm valuations October 5, 2021Pie in the sky solicitors’ firm valuations – a recent experience – an article by Jonathan Fagan, MD of Ten Percent Legal Recruitment and Jonathan Fagan Business Brokers.
- Unique experience of purchasing a law firm October 5, 2021Buying a solicitors firm is not like purchasing any other business of any kind. Dealing with solicitors is a unique experience and very often involves factors that some buyers simply ...
- Closing down your law firm? Think carefully.. October 4, 2021Think carefully before closing down your law firm – most solicitors’ firms have a value to them. An article by Jonathan Fagan, MD of Ten Percent Legal Recruitment and Jonathan ...
- Preparing accurate accounts to sell your law firm October 2, 2021An article discussing the importance of maintaining and preparing accurate end of year and ongoing accounts if you are planning to sell a law firm. Article by Jonathan Fagan, MD ...
- Neutral Meeting Venues for Law Firm Sale Discussions October 2, 2021A discussion of the merits of a neutral meeting venue for first meetings between buyers and sellers of law firms by Jonathan Fagan, MD of Ten Percent Legal Recruitment and ...
No is the quick answer and no is the even longer answer. In the UK anyone can set up as a business broker to buy and sell businesses. There are quite literally 100s if not 1000s of individuals, businesses, estate agents, accountants and lawyers who assist with the sale and purchase of businesses. There is no regulation of business brokers at all, although essentially the services most provide are simply advertising and marketing assistance, rather than any actual professional advice.
This is a question we often get asked because in some professional indemnity insurance contracts there seems to be a clause that states that if you are considering the disposal of your firm, you are in the process of selling it or planning to fundamentally alter it you need to notify your insurers. Because solicitors quite rightly want to adhere to the terms of their contract, quite a few partners query at what stage they need to notify their insurers that they are looking for a sale.
I am afraid that our advice on this is going to be a bit wishy-washy because whilst one could question why a professional indemnity insurance broker needs to know about a sale of a law firm prior to it going through as it is really none of their business, some of these clauses are worded in a way that mean there almost seems to be an obligation to notify in these circumstances.
The most common way for buyers to acquire a law firm is to either join as partners if it’s a partnership or directors if it’s a limited company and then for the sellers to simply resign and the buyers carry on. This then gives continuity to the practice, which has not closed down and the buyers have not become a successor practice because the practice still exists and is trading still.
Unless there is something particularly bad about the buyers then in theory the insurance should remain much the same because nothing will have changed, other than there will be new owners. Naturally if the types of work change or new works coming through, or there are new fee earners joining, then this will substantially alter the terms of the professional indemnity insurance policy and the potential risk, but if the practice is carrying on in the same areas of law, the location is the same and there is no further risk, then there is little to worry any professional indemnity insurance brokers because everything is the same and they still get paid their money every year.
However, things never seem to work out quite so smoothly as that, and unfortunately the insurance industry has its talons well and truly into the solicitors profession. There seems to be a plan by insurers to charge an extra fee at any point they see the opportunity to do so.. I suspect that the clause in relation to notifying them if you are thinking of a sale simply relates to a chance to charge more money for the privilege of the brokers considering the fact that you are considering a sale.
So whilst we cannot advise you to go against any contractual terms you may have, we think you need to question why a PII broker would need to know that you are thinking about a sale and how on earth they would ever know about a potential sale prior to it actually occurring if you are just in discussions with potential buyers. You will need to make your own judgement call.
I’m pretty sure I know what I would do in the circumstances but I think it does have to be an individual decision.
There do not appear to be the same issues arising for accountants in relation to professional indemnity insurance.
Yes we do. We are happy to be as involved as the parties to the deal want us to be. Sometimes we have sellers and buyes who require our full input throughout. The seller will want us to communicate on their behalf with the buyer and their representatives and the buyer may well require us to keep channels of communication open with the seller. For other deals we will have virtually nothing to do with negotiations or communication and both sides will simply notify us once a deal has gone through.
We don’t mind how negotiations take place, although we have found that a) deals occur more effectively when both sides deal politely with other (conversely sellers or buyers who are unnecessarily aggressive or confrontational with each other tend to find that deals collapse) and b) the parties do not change the goalposts every 10 seconds – a common problem with negotiations that take place between the buyer and seller directly and not via 3rd party advisers.
Yes we do. Whether you use our brokerage services or not, we can provide buyers (and sellers) with due diligence services.
Sellers can use our service to put everything in place ready for a sale and go through due diligence at the outset so any problems or issues can be addressed.
Buyers can use the service to save time and effort arranging for due diligence to be dealt with.
All services are provided by an experienced professional with former experience at finance director level of a leading regional law firm.
Contact us to request a quote.
Yes we do – full details of our valuation services are available here – prices start at £650 plus VAT for a full valuation based on current deal experiences and suggested deal structures. We can also provide full detailed formal valuations for accountant firms, prepared by a finance director and management accountant, formerly with a leading regional law firm.
Yes we do – full details of our valuation services are available here – prices start at £650 plus VAT for a full valuation based on current deal experiences and suggested deal structures. We can also provide full detailed formal valuations, prepared by a finance director formerly with a leading regional law firm.
The answer to this question is more complicated than a simple yes. We do a background check on everybody who comes our way and we also keep records as to previous conduct by potential buyers in relation to other firms they have enquired about. We notify our sellers of everything that we know about a potential buyer, so that you can make a decision as to whether or not you want to give consent for your information to be released to them. We do not release any information about a firm for sale unless the seller has given us specific consent to release it.
The only information any buyers will ever know about your firm is the agreed paragraph of information which is the detail we use to market your firm and put together your listing. When a new buyer comes through we do ask them for quite a bit of information about themselves and their company, and we will always undertake a background check on the company and the person before we send out details to our sellers. If anything comes from that then we will notify the sellers.
For anyone who has been involved in the sale of businesses, you will know that there are a number of reasons why buyers are looking to purchase, and a significant proportion of these are buyers who have an issue which require them to purchase another business in order to carry on trading. This does not necessarily rule them out as potential buyers, but it does require extra caution.
If we know anything about a buyer based on previous behaviour when they have been dealing with other sellers, we always tell the sellers. So for example if we have a buyer who has wasted everyone’s time on numerous occasions and then makes a new enquiry about another business, we will notify the seller that we have had problems with them before. The service we provide as business brokers is not just to effect sales and purchases of businesses – we act as an intermediary wherever possible and provide impartial and confidential advice to both sides of the transaction, even though it is the buyer who contracts with us to pay our fees. Buyers and sellers who have used our service in the past have expressed surprise at how honest and open we are when it comes to potential deals, and how little we try to sell anything to anybody. We think this is of great help to anybody who is looking for a sale or purchase and simply wants a broker to be there to provide a sounding board and advice.
Click the link below to register your details with us. If you would like to discuss our services before completing the online form give us a call on 01824 780937. We do not charge sellers any fees at any point in the process. All information is provided on a strictly confidential basis.
Simply click the link below to fill out our online form and we will register you as a potential buyer. Every week you will receive an email update with any new firms for sale that may be of interest. https://www.jonathanfagan.co.uk/register-as-a-buyer/
Very simple – you have three options.
Firstly, you can complete a detailed form online, providing us with all the information we need in order to proceed. Click here to complete the detailed form. The form takes about five minutes to complete and you can include as much or as little information as you wish.
Secondly you have complete a brief form initially and then we will be in touch to request further details. Click here for the short form.
Thirdly you can give us a call on 01824 780937 or send us an email to email@example.com.
If you go with the second or third options we will get back to you with a list of questions to complete and a confidentiality undertaking to sign in the first instance (the detailed form online includes these).
Once we have received the first batch of information, we will put together a proposed paragraph of sale, which will be the only information that is released to third parties without your express consent. This is usually brief and quite vague. If you have a look at our list of firms for sale (click here) you will see that some descriptions are extremely vague as to location, which of course helps to anonymise your listing.
Once you have approved the paragraph of information we list your firm on our system for sale and notify our buyers that a new practice has gone live. We also feature your paragraph in our regular weekly law firm for sale updates, and also our monthly newsletters which for law firms go out to c17,000 law firms and solicitors and for accountancy practices are sent to 11,000 accountants.
At all times we keep you updated with any new buyer enquiries that come through about your practice. Buyers will never know your identity without your express consent each time.
Remember there are no charges to list your firm with us, and the only fee that is ever paid is by the buyer if a successful deal occurs. You do have the option to pay for a valuation and initial due diligence assistance, but listing your firm for sale and the actual sale process is completely free.
This is the first question we always get asked by everyone who lists their business on the Jonathan Fagan website. It is quite an easy question to answer because it is pretty much always ‘how long is a piece of string’.
Law Firm Sales
The usual length of a law firm sale depends on a number of factors. Firstly, if you are a retiring solicitor with a practice that consists of yourself, perhaps your partner and a couple of support staff, coupled with a turnover of about £200k and a mainly conveyancing and wills & probate practice, then it is quite possible it will take between one and three years to sell your firm. This is not always the case, and our fastest sale in this category is six weeks, but similarly we have law firms listed with us who have been registered with us for over two years, and despite various conversations with potential buyers they are still up for sale.
If you are a law firm with very few clients and essentially selling as a shell, then it is possible that your practice will sell in less than three months.
If your firm has a turnover of more than £500k and less than £2,000,000 then it may well take between two and four years to find a potential buyer.
Our fastest deal ever has been three weeks and our longest one took two and a half years to go through the process from start to finish. The process of selling a firm does not just end when you find a potential buyer. The next process is due diligence and whether or not you manage to get through this process as well as the agreement to sell is another matter entirely.
In the first instance you need to be aware that there are a number of factors affecting how long it takes to sell your firm, which can include whether or not your practice has claims against it, the price you are looking for in order to affect a sale and also the information you have available to any potential buyer in order to progress the sale once discussions have started.
Firms that tend to be listed with us for a long time tend to have particular problems with the information they have available to provide to potential buyers. Quite often partners who have been in the same firm for many years and have never embraced case management systems find it very difficult to collate the information together that any potential buyer is looking for. Buyers want details of just about everything and they want to be able to access it easily without having to trawl through copious amounts of paperwork dating back many years. One sale we have come across was with a firm where everything was paper based and the buyer had estimated that he needed to actually employ someone to go through and deal with the paper files in order to make the business function once he had taken over.
A practice that uses case management software, has all the clients readily accessible and perhaps also in a spreadsheet, has details of everything from staff numbers through to the photocopying contract in one place for the buyer to see, will find it a lot easier to sell their practice than somebody who has no information available or very little, and is unable or unwilling to provide answers to questions when asked.
Accountancy practices are very different. There is at the moment a huge market for the buying and selling of accountancy firms and practices do not tend to stay on the market for lengthy periods of time. We would expect for most firms to have offers in place from at least 3 potential buyers within a matter of days, if not a few weeks. Again it will very much depend on your willingness to be active and respond swiftly to queries and requests. Offers are usually quick to come in and most buyers do not waste time in getting to a reasonable package. This is an extremely busy market with lots of active buyers out there with money to spend.
So if you want to know how long your practice is going to take to sell then the answer is anything from three weeks through to about four years, but depends very much on your specific circumstances, the size of your firm and the information you have available to potential buyers. Accountancy practices should usually sell virtually immediately but law firms really depend.
This is the number one question for just about everyone running a business. If I sell the business as a going concern, what is it worth? You can leap into an internet rabbit hole and start reading about complicated equations and multipliers affecting particular industries or professions. There are quite literally hundreds of ways of valuing a business, in particular law firms, that most of the figures that professional advisers come up with contradict others.
Accountancy firms are fairly simple – there tends to be a very easy valuation technique that works well for most and the industry seem to accept it as the norm. This is to calculate your gross recurring fees and multiply them by a factor, which tends to be around 1.2 at the time of writing this FAQ. This does very much depend on the quality of the gross recurring fees – obviously 300 recurring fees from clients aged 92 are not going to be worth as much as 300 recurring fees from clients aged 32!
Law firms unfortunately have no such easy solution when it comes to valuations. At varying times we are able to spot a trend – so recently there has been a tendency for sales to occur at around 50% of the most recent turnover, but this fluctuates and depends very much on the market conditions. Sometimes figures plummet to very little indeed, but we do usually recommend ignoring the copious articles available on the web advising sellers that their practices are not worth anything at all. If you look at who writes the articles it does tend to explain why someone would write this (the authors tend to be linked to buyers!).
Of course there is an old saying – valuation is vanity, sterling is sanity. Beware the business broker bearing gifts of ridiculously high valuations to flatter you into giving them business. We try to avoid valuing businesses for our clients – we would rather you start negotiations with buyers without indicating prices to them and see where discussions take you. This is the way to get deals going and we find time and again that sellers end up with sale prices higher than their expectations at the outset..
Owners of law firms and accountancy practices can be assured that any data sent to Jonathan Fagan is kept highly confidential. We never release any information about your business without your express consent in every circumstance and we do not divulge any detail to third parties.
All buyers and sellers sign a non-disclosure agreement at the start of the process and we renew these with potential buyers every 12 months.
In relation to IT & data security we adhere to the Cyber Essential principles and also ISO 27001. Our sister companies Ten-Percent.co.uk Limited and TP Transcriptions Limited are Cyber Essential and ISO 27001 accredited respectively.
We are registered with the Information Commissioner’s Office as data controllers.
Our IT system is constantly updated and our servers are protected by a high spec Sophos firewall. Our website is protected by Sucuri.
Jonathan Fagan is part of the Ten Percent Group of websites, which include legal & financial recruitment services. All details regarding law firms & accountancy practices for sale and their owners are kept completely separate on a different system.
Yes it is. We have been involved in transactions for the sale of sole practitioner law firms on numerous occasions and whilst they are not for everybody the firms do still have a value.
A couple of things you could consider doing to increase the chances of sale
- Convert your business into a limited company and
- Make sure there are some other fee earners in the business as well as yourself.
Both easier said than done, but the limited company point is particularly important. It is much easier for a buyer to purchase a limited company than it is to take over a sole practitioner’s business – if you are a limited company the buyer can simply enter into a Share Purchase Agreement and become or appoint a director.
If possible, have a think about converting, although we would usually recommend taking the usual tax and legal advice to ensure that this is the solution for you.
In summary – yes sole practitioner SRA regulated law firms do have a value and it is possible to sell them, but they are harder than other entities to sell – usually because the business will lack specific assets (eg other fee earners) rather than because you are a sole practitioner per se.
I have fallen out with my partner. Can I sell my share of the firm and what can I do to dispose of the practice and move on?
This is a nightmare situation for just about everybody concerned, whether you are the staff in that particular practice or the partner who has the problem with the other partner.
It is an occurrence we come across fairly regularly, with partners having mental health problems, turning to alcohol or drugs or simply deciding they don’t want to work anymore and wreaking havoc for their fellow partners.
We have come across practices that have been highly profitable and well established who are in great danger of collapse because one of the partners has ‘gone rogue’.
This is not an easy situation to extract yourself from and there are no simple solutions. One way of sorting this out is to try and get rid of the problematical partner as quietly and quickly as possible so that you can salvage some value from the remainder of the business and not let that particular person affect your work or the work of your colleagues anymore.
This is extremely difficult of course, because partners who fall out tend not to be on speaking terms and want to be as awkward as possible to each other, in the same way as a divorcing couple, which means that discussions are never easy to have. The partner you are trying to oust may not think there is anything wrong at all and wonder why the other partners are trying to get rid of them. Similarly, the partners remaining may find it quite hard to get out of the situation without damaging their work because of the potential for litigation.
There tend to be a few options, but one of them is definitely not that you can simply sell your share of the partnership to someone else. Whilst I guess this is theoretically possible, I have yet to see anybody who would want to go into partnership in a situation where the partners have fallen out and there is not much communication going on between them.
From the other partner’s perspective, why would they want to go into business with someone they hardly know? It is an impossible situation from both angles. Speak to your legal advisers about extracting yourself or dissolving the partnership and then give it a little while before looking to sell your part of the business.
I appreciate this is probably not the advice that you want to read but this is not an easy situation to be in.
Yes, no and it depends on the circumstances is our answer!
If a buyer purchases your law firm, becomes a director of the firm and the law firm carries on as before then there is no successor business because the law firm has continued to trade and no-one has become a successor and inherited the liabilities. The original firm still has the liabilities because it still exists and is still trading.
If the buyer takes over your law firm and merges it into his/her existing law firm so that the new law firm is Smith & Co incorporating Old Firm & Co, then the new firm is the successor practice. The old firm has ceased to exist and is now part of the new firm structure.
I think this is the easiest way of distinguishing between a law firm sale where a successor practice is involved and a law firm sale where investors have purchased it and the practice is continuing as before.
Please get in touch if you would like to expand on this advice or clarify it further – always happy to add extra information to the FAQs..
Run Off Cover
There are all kinds of issues involving PII run off cover when it comes to law firm sales. The upshot is that while run off cover is a major stress for sellers to be worried about it tends not to be a major issue in the actual sale or disposal of your business because if you do achieve a sale or disposal of a practice it is highly unlikely you are going to need to pay run off cover. Some brokers still try to have their cake and eat it and try to make the seller pay run off cover even though their practice has been acquired by a successor firm. There are situations where run off cover comes into play because a buyer has simply bought the structure and not the clients of a firm, or vice versa, which in some circumstances still means that run off cover needs to be purchased in order to protect the seller when they retire.
We have a list of questions to ask yourself when you are preparing to sell your law firm: https://www.ten-percent.co.uk/questions-to-ask-yourself-when-preparing-for-the-sale-of-a-law-firm/
Jonathan Fagan Business Brokers have over 20 years experience with the sale and purchase of firms. We came across mergers & acquisitions work through our recruitment business in the legal and finance sectors and in recent years we have expanded our offering to provide specialist business brokerage services. At any time we will be working on at least 15 potential deals and have at least 5 deals going through the process of completing once a price has been agreed. Our company has seen an average of one deal complete per month for the past 12 months although we anticipate this increasing over the next few years to one deal every week.
Our experience tends to be based on previous deals and negotiations – we know what firms sell for at any time and we try to provide our expertise to both the sellers and buyers on an impartial basis. Buyers and sellers tend to go from one extreme to the other – buyers look to pay as little as possible up front and sellers seek as much cash as they can get at the outset. Buyers want sellers tied in for as long as possible, sellers want out as quickly as possible! Deals occur when a compromise between these two positions can be reached.
No experience really gives anyone the knowledge to value a business coming through for sale. The information we give in relation to values of businesses is very specific to our experiences of deals that have gone before. Whilst we can give potential sellers and buyers an idea as to the sorts of values we expect a business to sell for, we do not ourselves provide specific valuations to law firms or accountancy practices other than where you have used our specialist valuation service (which is a paid service).
We will always be happy to provide details of previous deals we have come across that are relevant to your business or the business you are trying to buy, and also to give you an opinion as to the sort of value we expect to see a firm reaching. However, it is rare that we are able to change the minds of sellers if they have a set price in place, even if the set price is much higher than we would anticipate the firm selling for.
If you use our specialist valuation service a consultant will spend some time with you going through all your details, assessing previous deals and then coming up with a figure that he or she thinks you should be able to use, whether it is required for partnership valuations, asset valuations, partnership splits, sales of practices or for court proceedings.
However, it is important to bear in mind that it does not matter what valuation you get for a business, the value of a business depends entirely on the price that someone is prepared to pay for it.
In relation to law firms, by far an easy sale is one where the seller has a realistic idea as to the sort of price a practice is worth. Not only that, they have also communicated quickly each time an enquiry has been made, they have got all the paperwork together ready to go each time a new buyer enquiry gets sent over and they are easy for everyone to deal with.
Accountancy practices tend to have everything ready at the outset and we don’t have so much of a problem collating everything together for these deals.
So many deals happen because of synergy between the buyer and the seller rather than any particular feature of a firm for sale.
Deals often break down because one of the parties gets a bit awkward or doesn’t communicate well with the other side and things start to go off the boil rapidly. Furthermore, if a seller does not respond to a request for further information quickly, then a buyer can quite often decide it’s not for them and walk away.
Quite a few sellers put their firms on the market and take a very long time to respond to queries when they come through from potential buyers, which gets the buyers frustrated and they move on to new targets. The seller then contacts us to ask why no enquiries are coming through (!).
Key factors that will make a sale happen or more likely to happen are a willingness to provide information quickly from both sides, a willingness to discuss and negotiate on prices, and a good spirit throughout discussions.
We offer very straightforward fees.
Sellers pay no fees unless you use our premium services.
Buyers pay a fixed fee, agreed at the outset, if a deal occurs. No deal, no fee.
And that’s it.
Our buyer fees tend to range from around £5k plus VAT up to £10k plus VAT, depending on the size of the firm for sale and the perceived complexity and involvement for us in any deal. We never change the fee once it has been agreed at the outset, even if the deal takes months to conclude.
Sellers pay no fees to list their firm for sale and we do not charge any fees to assist with negotiations, discussions, advice on strategy, verbal valuations or provide information. We do however provide premium seller services – Gold and Platinum – which include a wide range of additional services for sellers on top of our standard list and sell service. Details of our seller services are here.
Buyers pay nothing to access our information services online, assistance with negotiations, strategy advice, discussions and anything else we can assist with. We do of course charge a fee if a deal takes place (or you recruit staff from the target firm). List of firms for sale available here.
We provide paid formal law firm valuations and law firm & accountancy practice due diligence services separately from our broker service. These are available to anyone – whether you looking to purchase or sell a firm or simply take on a new partner or raise capital. Click here for details.
Sales Procedure – a Rough Outline
A very rough outline of the procedure is as follows:
- All parties sign confidentiality undertakings.
- We agree terms with the buyer.
- The buyer is provided with information about the practice for sale.
- The parties meet or speak about plans and proposals. Proposals can be as varied as the partners of the selling firm joining the buyer’s practice or the selling partners accepting a lump sum in cash to exit the business.
- A ‘heads of terms’ (also known as a HoT) is drafted and agreed. This sets out a timetable for the acquisition and specifies who does what and when. It is rarely legally binding – just an outline of the intentions of both parties.
- A deal is reached and completion takes place. The buyer pays us an introduction fee – this varies according to the sale/purchase in question.
We do not usually recommend indicating a sale price unless you have something very specific in mind. Law firms in particular are notoriously difficult to gauge a price for, because they do not have the same realisable assets that an accountancy firm for example has.
Accountancy practices tend to be valued on the number of repeat clients who come back year after year to get their annual accounts completed and receive advice in the interim. An accountant tends to know what recurring fees they have coming in, or what likely recurring fees they have coming in, but a solicitors’ firm rarely does.
Solicitors’ firms may have regular clients who, if they have a legal problem, will use them, but they never know how often those legal problems are going to arise, which means that they are unable to give a recurring fee valuation. The only exception to this is when an employment department for example has recurring fees from clients paying subscriptions for ongoing services or business clients are paying an ongoing subscription for their own in-house lawyer provision. Because of this we normally just recommend including the facts about your firm in the listing, and then leaving it up to discussions for a price to be formulated.
The danger of putting a price on the practice on the listing is that you can immediately rule out lots of potential buyers who might look at your price and think it is way too high, or similarly you may rule out higher bids than the price you were thinking of, which surprisingly happens a lot more than you would anticipate.
So in summary, we do not usually recommend including a price on a law firm listing, but to wait until discussions start and then formulating an idea as to the sort of price you want for your business. We are always happy to have a confidential discussion about the types of price we would anticipate for your firm – call us on 01824 780937.
Who buys law firms and accountancy practices?
Law firm buyers fall into a few categories. Large investors buying into the sector, family buyers – purchasing for family members to take over and run a law firm, lawtech companies buying into the actual transactional side of the industry and companies in related sectors looking to run their own legal operations. We get some solicitors who look to establish their own companies by buying another business, but they are the exception to the norm.
One glaring exception is the local rival law firms. Our experience to date is that the vast majority of enquiries we get from local rivals or firms based locally looking to expand by takeover are making the enquiries to either a) get intel on the operations of a local rival or b) looking to try and acquire a local rival without needing to spend very much or any money.
Looking at our list of successful sales, the few we have had involving local firms have been a flat pack deal (where the buyer purchased the remnants of a failed law firm from the administrators) and a retirement arrangement where the seller became a consultant for the buyer’s firm and no money changed hands. Almost all the sales that have involved a premium price being paid (ie cash) have been with other types of sellers.
A lot of sellers have a fairly romantic notion that they will set up a firm, work in it and on it for over 40 years, find a young, enthusiastic solicitor just starting out who wants to spend £250k on a law firm, sell it to them and depart to enjoy retirement. Unfortunately reality is very different. Most younger solicitors see how easy it is to set up their own firms and don’t see the point in purchasing an existing practice, particularly one that may have antiquated systems and methods of operation. It is rare to find firms managing to find a younger partner who comes on board with a view to acquiring the equity after a set period of time.
Very different types of buyers. Most buyers of accountancy firms and gross recurring fees are other accountancy firms and accountants. Just about every deal we see or are involved in will be with another accountancy firm, probably quite local, looking to pay a set multiple for the gross recurring fees (in 2022 this seems to be around the 1.2 x GRF mark, although this will fluctuate depending on the market). We don’t see many alternative types of buyer and there doesn’t seem to be the consolidation that occurs in the legal profession – accountancy firms on the whole are either one man or woman bands or large multi-partner operations with multiple offices across the country, if not the world.
Generally there are so many different types of potential buyer for businesses it can be hard to categorise them, but the above is a general snapshot of the buyers we see on a day to day basis making enquiries about the law firms and accountancy practices we have for sale.
The business broker and business transfer agent market in the UK has some really dodgy operators in it. A couple of the more regular tricks are below:
1. The small print – there are quite literally hundreds of articles and complaints on the internet about some of the larger and more sophisticated sales operations out there who have armies of agents cold calling businesses to see if they want to sell. The most common clause is the exclusivity one. You sign an agreement with a broker and then if you end early or sell elsewhere you pay them an administration fee. www.cebta.org.uk has links to actual cases and examples that have arisen, involving some of the more dodgy firms.
2. The high valuation to entice a signature. This is a real problem for us – we have clients who have paid for a valuation, which we think is off the scale in ridiculousness, but the client is convinced that the valuation is genuine and insist on a sale at that price. Unfortunately the valuation is a complete waste of time and has been prepared for one reason only – to sign the seller up on an exclusivity contract for a period of time and take fees for various services.
Obviously our company is a little different! We charge no upfront fees and neither do we tie any of our clients in to exclusivity contracts. We are naturally delighted if anyone sells or merges without our assistance and we provide any additional advice to all our sellers and buyers at no cost.
We are UK based business brokers. Our head office is in North Wales, not very far from Chester and Mold, in a small village situated in the Clwydian Range (an area of outstanding natural beauty) called Llanarmon-yn-Ial. As a business we have been remote working since 2000, so have over 20 years’ experience of it!
Our clients are located across the UK and also in Ireland. We are quite happy to assist anywhere required and offer a premium service on request for face to face meetings with potential sellers or buyers.
As coincidence has it, we have a guide to selling a law firm available right here – no charge! If you have any questions about any of the advice or content, please contact us.
JonathanFagan.co.uk is a specialist business broker service and part of the Ten-Percent group of Legal & Financial Recruitment websites based in the UK. We assist with national and international legal jobs for lawyers and legal staff as well as accountants and finance professionals. Throughout our trading history we have been involved in sales and mergers of law & accountancy firms. Jonathan Fagan is Managing Director of Ten-Percent.co.uk Limited and undertakes all sales and mergers work on behalf of our company. and this is our specialist broker website.
For law firm recruitment please visit the main Ten Percent Legal Recruitment website for permanent roles and Interim Lawyers for locum roles. For accountancy firm recruitment please visit the Ten Percent Financial Recruitment website.
Jonathan Fagan is a trading name of TP Recruitment Limited, a privately owned company.
Who is Jonathan Fagan?
Jonathan Fagan LLM FIRP Cert RP is a qualified solicitor and Managing Director of TP Recruitment Limited. He studied law at Leicester University and Frankfurt University before completing his training with a specialist practice in Leicester. On qualification he worked for a Chambers-listed solicitors’ firm in Nottingham before founding Ten Percent Legal Recruitment, Interim Lawyers and Ten Percent Financial Recruitment in 2000. Jonathan set up the Ten-Percent Foundation in 2003, a charitable trust linked to the trading companies and handling the 10% charitable donations we make every year (hence our name).
Jonathan personally handles all business sales and purchases. We have a database of over 300 registered buyers and we send out regular updates to over 8,000 law firms via our recruitment network. Our companies have worked with over 2,500 law firms and accountancy firms since April 2000.
Jonathan is editor of the Legal Recruitment News, and Accountancy Recruitment News, both monthly newsletter updates for Employers and Candidates in law and accountancy. He is the author of The Guide to Writing a Legal CV, Interview Answers for Lawyers and the Interview Guide for Lawyers (available at our bookshop) and has lectured in the past at Huddersfield University on CV Preparation, Interview Practice and Legal Careers for LPC students. You can read his award-winning Legal Recruitment blog here, which contains advice on interview questions, recruitment tips for firms and candidates, as well as commentary on the legal job market. You can also read his regularly updated Ten Percent Article Bank here.
Articles & Updates from Ten Percent Legal
- Buying a solicitors firm is not like purchasing any other business of any kind. Dealing with solicitors is a unique experience and very often involves factors that some buyers simply fail to appreciate. The post Buying a Law Firm – a Unique Experience appeared first on Ten Percent Legal Recruitment.
- New Solicitors Looking for Jobs and Law Firms for Sale 7th October 2021 from Ten Percent Legal Recruitment. The post New Solicitors Looking for Jobs and Law Firms for Sale 7th October 2021 appeared first on Ten Percent Legal Recruitment.
- New Law Firms for Sale x 5 London, Buckinghamshire, NW Wales and East Anglia – Law Firms For Sale Update 2nd August 2021. The post New Law Firms for Sale x 5 London, Buckinghamshire, NW Wales and East Anglia appeared first on Ten Percent Legal Recruitment.
- Is it Possible to Sell a Law Firm to a Non-Solicitor Buyer? An article by Jonathan Fagan, MD of Ten Percent Legal Recruitment. The post Is it Possible to Sell a Law Firm to a Non-Solicitor Buyer? appeared first on Ten Percent Legal Recruitment.
- Law Firm Sale Alert 14th July 2021 Solicitors in Hertfordshire, ABS shell, Central London Solicitors and HR & Employment Law Consultancywww.jonathanfagan.co.uk – Law Firm Sale Alert 14th July 2021 Solicitors in Hertfordshire, ABS shell, Central London Solicitors and HR & Employment Law Consultancy The post Law Firm Sale Alert 14th July 2021 Solicitors in Hertfordshire, ABS shell, Central London Solicitors and HR & Employment Law Consultancy appeared first on Ten Percent Legal Recruitment.
- Law Firm Sale Alert 21st June 2021 – ABS Manchester, LAA Crime Contract London, Law Firms in Staffordshire, Surrey and West MidlandsLaw Firm Sale Alert 21st June 2021 – ABS Manchester, LAA Crime Contract London, Law Firms in Staffordshire, Surrey and West Midlands. The post Law Firm Sale Alert 21st June 2021 – ABS Manchester, LAA Crime Contract London, Law Firms in Staffordshire, Surrey and West Midlands appeared first on Ten Percent Legal Recruitment.
- If you are reading online that your law firm is worthless and you should give it away, have a look at who has written the article… The post Law Firms Have No Sale Value appeared first on Ten Percent Legal Recruitment.
- How to Make an Offer to Buy a Law Firm that is going to get accepted. An article by Jonathan Fagan, MD Ten Percent Legal Recruitment. The post How to Make an Offer to Buy a Law Firm appeared first on Ten Percent Legal Recruitment.
- There have been a flurry of interested partners of law firms looking to sell up and we get a lot of calls into our offices asking what the practice is worth. Article by Jonathan Fagan The post Selling a Law Firm – What’s it Worth? appeared first on Ten Percent Legal Recruitment.
- Law Firms for Sale Alert 23rd March 2021. 5 listings – London Self-Sufficient Team, Sussex, South Coast, HertfordshireLaw Firms for Sale Alert 23rd March 2021. 5 listings – London Self-Sufficient Team, Sussex, South Coast, Hertfordshire. New listings from Jonathan Fagan. The post Law Firms for Sale Alert 23rd March 2021. 5 listings – London Self-Sufficient Team, Sussex, South Coast, Hertfordshire appeared first on Ten Percent Legal Recruitment.