Key Questions for Sellers (part 4)
The fourth and final part of our series answering the questions vendors ask most as they consider selling their goodwill — updated for 2026
How long is the normal clawback period for and how does it work?
Because demand still outstrips supply for most practices, vendors are often in a strong position to dictate terms. It’s usually unwise to agree a clawback period extending beyond the first year post-sale, though where one particular client represents a disproportionate share of the risk, it can make sense to extend the clawback for that client alone. If a purchaser makes a claim under the clawback clause, the vendor has a right of discovery — they can look at the relevant client files, and speak to the client if necessary, to confirm the loss is genuine. The agreed shortfall in billed fees, multiplied by the sale multiple, is then deducted from the relevant payment.
Should I sell to a firm whose chargeout rate is much higher than my own?
That’s a commercial decision for you alone to make. If you’re concerned about higher rates being applied to your clients during the warranty period, there’s a straightforward solution: the purchaser agrees not to raise fees for similar work by more than an agreed percentage — commonly around 10% — during that period.
What are my options with regards to the freehold/leasehold of the premises?
The more flexible you can be here, the better the quality of response you’ll get from the market. Insisting a purchaser takes over your lease will usually narrow interest, as will any heavy contingent liability in that lease. If you hold freehold premises you won’t need after the sale, it generally helps to market the practice with several options open: a rental agreement with you, purchase of the freehold outright, or the purchaser servicing clients from elsewhere. Each option tends to appeal to a different type of buyer.
What are the advantages of my firm joining a consolidator?
There are several. You gain access to funds to upgrade your systems, particularly IT; you crystallise your goodwill immediately, typically via a mix of cash and shares; and, unless you want to retire, you’re usually invited to join the management team and continue earning an income. Staff often get improved career opportunities across the wider group, clients get access to a broader range of services, and succession — often the hardest problem in practice ownership — is taken care of as part of the deal.
What happens about my work in progress and debtors?
Standard practice is for the vendor to collect their own outstanding debts, with WIP valued at the point of completion; the purchaser then finishes and bills that work, remitting the vendor’s share as it’s collected. Any under-recovery is normally apportioned between the two parties.
What is the difference between an agent & a broker?
An agent acts for only one side of the deal. That can look appealing from that party’s point of view, but unless both sides reach a genuinely win-win outcome, disagreements tend to surface later in the process — dragging things out and driving up solicitors’ fees. Without both parties receiving arm’s-length advice on the structure of the deal, disputes over anything from Heads of Agreement to the reconciliation at the end of the warranty period can create real friction. A broker, by contrast, is responsible to both parties, charges both, and has a direct interest in making the whole deal work — including bringing experience and impartiality to any dispute that arises under the clawback clause.