Selling a professional services firm

The problem

Plenty of good businesses don’t sell for what they’re worth, or don’t sell at all. Buyers walk away when the books aren’t clean, the business depends too much on the owner, or one customer is too big a share of sales.

And the real estate can kill a deal late: a landlord who won’t consent to an assignment, a lease with too little term left, or a property question nobody looked at early.

What I do about it

I start with a confidential look at the business and the real estate together, so the things that make buyers nervous get fixed before they ever see them. I know what active buyers are looking for, I help you get the business ready, and I handle the lease or property side, which is where a lot of sales get stuck.

Everything goes through Coldwell Banker Prestige Realty and is agreed in writing first.

Ready now or planning ahead, the first step is the same. See succession planning for what happens on the first call, realistic timing and what to gather.

What buyers in this space look for

• Recurring clients. Retainers, annual engagements and long relationships are worth far more than one-off projects.
• Relationships beyond the owner. If every client calls you, buyers worry they will leave when you do. A team that already handles the work changes that.
• Clean books and contracts. Engagement letters, contracts that can be assigned, and work in progress you can show.
• Licensing and rules where your profession has them. Some firms can only be owned by licensed professionals, so check with your regulator early.
• A transition plan. Most buyers will want you to stay for a while and introduce them to clients.

Why and when owners sell

Retirement is the big one. Others want to merge into a larger firm so they can stop running the business side. Starting two or three years out gives you time to move client relationships onto the team.

How a confidential sale works

1. A first conversation. Just us. What you have, what you want and when.
2. A quiet look at the business and the real estate. I can tell you what buyers are likely to like and where they’ll push.
3. Getting ready. Statements, the lease or property, a list of what’s included. Your accountant and lawyer come in early.
4. Approaching buyers carefully. A short, anonymous summary first. Details only after a confidentiality agreement, and only to buyers you’re comfortable with.
5. Offers and due diligence. Usually a letter of intent, then a closer look at the books, contracts, staff, equipment and the lease.
6. The lease or property. Landlord consent and a release, or the property terms if you own the building. This is where deals often stall, so I start on it early.
7. Closing and handover. Many owners stay on for a set period to help with the transition, if they want to.

Where the real estate fits

Most firms lease office space. The buyer may take over your lease, merge you into their office, or want a shorter deal. If your lease ends in the middle of the sale, that can work in your favour.

I can look at the timing so the office is never the thing holding up the deal. Any work I do on a sale is through Coldwell Banker Prestige Realty and agreed in writing first.

Where the sale is shares only, with no real estate, I’ll say so up front and work with your lawyer and accountant on those parts.

Where everybody wins

You want a fair price, care for your staff and customers, and a clean exit. A buyer wants a well-run business they can trust, with a lease or property that supports it. A landlord wants a strong new tenant.

When the business is ready and the real estate is sorted early, all three can say yes.

Questions people ask

What makes a professional services firm worth more to a buyer?

Clients who have stayed for years, revenue that recurs, a team that holds the relationships, and an owner who will help with the handover.

Do I need to stay on after I sell?

Usually for a while. Many deals include a transition period where you introduce the buyer to clients. How long is something you negotiate.

What happens to my office lease when I sell?

The buyer may take it over with landlord consent, you may sublease or assign it, or it may end around the closing. It depends on your lease, so read it early.