The Key Stages of Selling a Small-to-Medium Law Firm

There are many different reasons to look into selling your law firm, but it’s important to bear in mind that a sale doesn’t need to be a stressful or long-winded process. This is why we wrote a quick guide providing a brief overview of the whole process.
What Can I Do to Increase My Chances of a Sale?

Here’s a quick checklist of things you can be doing to help make sure everything goes smoothly.
• Accounts fully explanatory and in order with nothing missing. Prepare copies of these for potential buyers.
• Make sure you have the consent of every shareholder, partner, equity partner and notify senior management if you can.
• Copies of applications for Professional Indemnity Insurance for the previous three years, these carry plenty of useful information to purchasers.
• Get a run-off insurance price from PII providers.
• Make sure your Companies House information is up to date.
• Maintain a distance from the company where you can, buyers like to see a business that functions on its own two feet.
• Write user manuals for different processes in your business to ease handover, as well as allowing things to run smoother without you.
Valuation Can Be Useful, However…
When it comes to making any decisions regarding the future of your law firm, it’s extremely useful to have an accurate, up to date valuation. While it’s not strictly necessary for selling your firm, it can prove invaluable in some transactions. Valuing law firms is a highly individual and nuanced thing, and while you can come across plenty of rules of thumb online for valuations, the specific nature of each business can make this kind of cookie-cutter approach very limited.
Circumstances vary so much, and prices for law firms fluctuate dependent on the market strength and buyer interest that concrete valuations can sometimes be a little limiting, although they can also prove useful in some situations. Valuations can help entice potential buyers, but they can equally put buyers off if they’re too high or low. Being elusive about your firm’s price is frequently a better approach. Essentially, every single law firm sale is different, requiring a different approach and fresh attention to detail, which is our speciality.

The Sale Process

When it comes to the sale itself, it’s actually extremely straightforward. We can handle the vast majority of the process. Through our forty years of experience and vast network of potential buyers and interested buyers, we can advertise your firm, cultivating interest. We can help guide you through negotiations and price discussions, as well as offering valuation services.
The process then involves the buyer signing terms and confidentiality agreements, and then we share details of your firm. These details include your identity and location, the last three years accounts, any claims made against your firm in the previous five years, PII information, turnover and net profit as well as sources of work. Once the buyer is satisfied and happy, they will speak to you face to face concerning the business, sale and handover.
If the potential purchaser decides to make an offer, they perform due diligence, which involves making sure they have all the key information on everything about the business, including background checks on the relevant aspects. Then we proceed to the offer stage, which can include a lot of negotiation or very little. We can help extensively with this part of the process, making sure you come out of it with the best possible price for your firm.
If you’re interested in selling your law firm or exploring your options, give us a call on +44 (0)20 8204 3600 today.