As many Australian accountants come to considering when to sell up their main asset of their working life, their accounting practice, it’s interesting to see how people start to consider readying their practice for sale.
As Odyssey has been providing outsourcing services to Australian accountants for over a decade, we’ve seen a few accountants sell up their practice or consider working less.
Firstly, we hope that you are all pursuing your dreams and making sure that you are taking time for a work life balance. With over 1,000 firms having used Odyssey’s services in the past decade, we’ve unfortunately seen some life threatening major illnesses that have caused accountants to rethink their retirement plans.
Certainly the work life balance is something the younger generation has done in spades, and whilst some of the older generation might feel slightly miffed at this self expressed new generation, they do have more freedom than prior generations.
I had a chat with an Australian Accounting business owner earlier this year, who was looking for an out. She had been working in her practice for 30 years, doing accounting and taxation services. She has around 500 to 1,000 “Individual” returns that she does in the first 3 months of the tax season, which requires her and her staff to be on-station for long 12 hour days. The margin on these individual tax returns is quite low, but she can churn through 20 or so a day, whilst she acknowledges her tiny little reception gets quite crowded during this period.
At the same time, she mentioned that her compliance work comes to a standstill, as it is “all hands on deck” to get through these “Individual” returns. This 3 month period allows her to obtain about $150,000 of her $600,000 or so revenue so she in reality spends ¼ of her year to obtain ¼ of her revenue, and it’s pretty exhausting work.
The rest of the year is spent on the couple of hundred company, trusts, partnership and superfunds, though most of her clients need “Company” tax returns. She really hasn’t had any time to look at structuring for her clients, or getting them into superfunds. She prides herself on her work, and has only 3 ATO audits in the last 10 years with no penalties.
She’s busy preparing quality work, and in reality struck us as a traditional professional.
This small practitioner has 2 senior staff, 5 other staff including a receptionist, administration person. She’s discussed selling the practice to her senior staff but one of her staff just wants to leave on time as she has 2 small children. The other senior staff doesn’t want to take on the responsibility and isn’t really a business person.
After 3 decades of working in the practice she now has just had her first holiday in years and went up to Queensland for a holiday with her husband. They like it up that way, and want to go up there for retirement. Their children are all grown and left, and she can stay on for up to a year to help the transition.
However, after looking at this practice, it became apparent that there were a lot of issues: legacy system issues, the client mix wasn’t correct, there was limited scope for scale, limited scope to merge to another firm. All that was on offer was a “seat” in the owners office to replace the owner. Pretty much a straight “swap in – swap out” arrangement. It felt like taking on someone else’s ball and chain. I imaging many business owners must feel like this?
I’d have to say that there are many Australian accountants now approaching retirement that are exploring opportunities to sell up their practice and retire. So it’s critical in these closing years to consider a strategy for maximising the value of this main asset, and on the exit strategy.
You can read the second part of this post here: Selling the Accounting practice ball and chain… Thoughts part 2.