Two Words to Avoid at All Costs as a Vendor
Our firm is continually asked what the market is like for practice sales and purchases. Our common response at present is that it remains very much a vendor’s market with the number of firms looking to acquire a practice or fee base far outnumbering those publicly putting their hand up or ‘for sale’ sign out on display. That’s not to overlook that a considerable number of transactions take place ‘off market’ with a deal done before many other firms are even able to express an interest.
That said; we need to be mindful of what it actually is that we are acquiring as a purchaser of a professional firm. Essentially, a practice or fee base acquisition represents simply an opportunity to be the continuing service provider to a group of clients. No more, no less. It’s about transitioning those relationships across to a new party who is represented as the most suitable adviser to continue the provision of the clients’ required services. However, neither the vendor nor the purchaser can make, force or guarantee the transition of such relationships. Some practitioners would perceive this as quite a risky proposition and perhaps they are correct. However, in part, the success of such a transaction and transition will be heavily linked back to the original and initial communication pieces received from both the vendor and the purchaser.
Here is the key, words such as selling or sold, should be avoided at all costs when it comes to these communication pieces. Again, we are dealing in relationships here. Telling your client base that you have sold them to another practitioner is likely to anger many of your clientele resulting in increased client loss and a greater impact upon any retention sums. No-one likes to be told what to do or dictated to without consultation. So, if a client feels that a retiring practitioner has made this decision for them and they are expected to just trot along in line with this direction, then client relationships are likely to be severed en masse.
As those who have performed transactions in the past will no doubt attest to, any communication regarding such proposed transations must be performed in a positive, enthusiastic manner and generally by both parties. Clients need reassurances that little will change, service quality and timing will remain consistent and the departing party will be assisting for a period of time to ensure the ongoing advisers are familiar with the clients’ needs and requirements.
Whilst terms such as selling or sold don’t necessary dispute the continuity of good service from the clients’ perspective, it does infer that they have little say in who will be their future service provider.