In this article we are looking at why participation in the selection process is important when it comes to the purchase of goodwill.
In effect the process of the mergers and acquisitions of accountancy practices is like a match-making service helping compatible buyers and sellers to find one another. The matches made are generally influenced by personal chemistry and thus are a kind of natural selection. As one of nature’s tools ensuring survival into the next generation, the principle, when applied here, is intended to promote not only the continuity of, but also the future growth of the client base to be sold.
Just as in nature the instinct to survive is strong, the wish to be the successful purchaser is also strong because there are relatively few opportunities to find a suitable match. Will your potential partner reciprocate your interest with an enthusiasm equal to your own? It all depends on what you can offer them.
Where so many would-be purchasers all consider themselves to be suitable, is it reasonable to expect them to go through a selection process where the odds are less than favourable? Yes! There is probably only one purchaser who will meet all of the vendor’s criteria at any given point in time, and who’s to say it won’t be you? All you have to do is put yourself in the shoes of the vendor by understanding exactly what it is they are looking for and what their particular concerns may be. Then you are advised to consider how you can best assuage their fears whilst offering a solution to their requirement. Just as in nature, the rest will come down to chemistry!
The purchaser should recognise that fees acquisition is not like going to the supermarket and choosing something off the shelf – if anything it’s the vendor who will do the choosing from a large pool of potential new owners who all promise to ensure the practice will flourish under their stewardship. The selection process positions the sellers so that they may discern who will be most likely to maintain and grow the fee base (often the sum total of a vendor’s life’s work) by offering the staff a stable new home plus continuity for, and retention of, the clients who will then enjoy access to additional services and frequently a better level of care on a more cost efficient basis.
But it’s not only the vendor who will benefit from the outcome of the selection process. The unsuccessful purchasers may depart with good grace knowing that they did not offer quite as good a fit as another party, but hopefully they will have benefitted from the experience. The successful buyer, by having demonstrated willingness, flexibility, compatibility, professional competence and the right attitude – not to mention access to sufficient funding! – will be able to proceed with confidence knowing that they are certainly the most eligible!
Lucinda Kitchin, Feb. 2019