Selling your business

Selling your law business

Selling your legal practice is not as simple and straightforward as selling other types of businesses because consideration needs to be given to such matters as planning ahead, professional valuations and dealing with potential run-off cover. When selling a law firm, it is essential to plan in advance by getting your firm into good shape and making sure there are no outstanding compliance issues.  By ensuring your firm remains profitable, you will give it the best opportunity to attain the highest possible price and achieve the best results.

Law firms looking for a buyer

Many firms will look towards their immediate competitors when looking for a buyer, given the obvious proximities, this could seem like a wise move. But there are others who deliberately avoid neighbouring practices and search further afield, seeking to become part of larger firms with a greater breadth to their services in order to enhance their own. External investors may be a viable option, and there are also “succession solutions”. These are buyers who actively seek to acquire firms within a shortened time frame.

External investors

In order to attract external investors, such as venture capital and private equity houses, it is important to have a clear business model and plan. This will enable the investor to see how the return on their investment will be delivered in both the short and medium term, and what makes your firm unique amongst its competitors. This doesn’t mean you have to be practising in a niche area or provide boutique services, but could be as simple as having an excellent brand or a particular geographic presence.

Getting your firm ready for a sale

Much of getting a firm ready for sale is about being successful and profitable, and making sure the firm can survive without its principals. This could mean early widening of client relationships so that they are not affected by a transition of fee-earners, or transferring management and support functions out of the hands of the managing partner, so they are no longer running the firm. Fundamentally, the process should begin years before, grooming the practice and making it saleable.

Getting professional help when selling your firm

It is crucial to take specialist professional advice when working out the valuation of a firm. At Law Mergers and Acquisitions, our experts are well-placed to assist in this important aspect. We will look at various factors including the size of your business, client files, goodwill, assets such as fixtures, fittings, equipment, and your library. Not obtaining the right price for your business when it comes to the sale is the single biggest risk that owner’s lose sleep over. We arrive at our valuation by looking at a number of metrics, such as financial data, market trends, the age of your practice, the type of work undertaken, and any other factors we believe are significant.

The sales process

The actual sale process starts by meeting with you either during or outside office house for a full and frank discussion, after which we can prepare a comprehensive practice profile written in a style that appeals to potential buyers. Thereafter, each process is slightly different and typically involves some form of due diligence, initial valuation and offer, negotiation of price and heads of terms, and tax structuring, ultimately leading to a signed sale agreement.

Managing the process

But let’s not forget the all-important employees and clients. How can disruption be minimised during the sale process for them? Employees are likely to fear any proposed changes and the upheaval that goes hand in glove with being part of a new organisation. Bringing them into the conversation at the outset and giving them as much information as possible is a key ingredient to a sale or acquisition running smoothly. In respect of clients, they should be reassured that their case will continue to be dealt with seamlessly, and where possible, with the same staff.

Take the next step

Explore the opportunities for growth and success at Law Mergers. Join us on a journey to unlock the full potential of your firm. Visit our website today and take the first step towards a brighter future in the world of law. Your success story begins here – click the link now.