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One business broker has noted a growing trend of mature accounting businesses looking for quick sales and accepting sale prices well below their market value.
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Accounting firms taking ‘fire sale’ prices
25 October 2016
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8 minute read
Connect Financial Service Brokers chief executive Paul Tynan said he has never seen so many firms on the market at such short notice.
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He said retirement is the overwhelming reason for sales, often escalated by ill health.
The industry is now seeing the consequences of broader failures to incorporate effective succession planning, Mr Tynan suggested.
Further, this emerging “fire sale” trend can be attributed to accountants persisting with business models that are either not holistic, or do not actively cater for the evolving nature of client expectations.
“The undeniable reality is that there is a Baby Boomer bubble of owners trying to sell their small businesses to the next generation but there are not enough Gen Y buyers interested,” Mr Tynan said.
“Not all Baby Boomer business owners have been sitting on their hands and they have responded with business models attuned to the new era of professionalism and provision of advice services in the 21st century. But there is definitely a significant subset within this demographic with resistance to change firmly ingrained in their DNA and [who] have been consistent reluctant adapters to modernisation.
“When the reluctance to change and modernise is combined with an emergency exit, the result is a succession planning disaster.
“However, businesses that have been structured on corporate client-centric service and advice models with good processes, latest technology and adherence to the highest standards of compliance are always in demand and receive premium offers.”
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