1. Has the Buyer Explored External Financing?

In reality, there are plenty of financing options available. It’s a wise strategy for buyers to first explore financing options through banks. Lenders often prefer businesses with reliable cash flow, and practices like accounting or tax services fit that description perfectly.

2. Is the Down Payment Sufficient?

A down payment serves two key purposes – it shifts some financial risk onto the buyer and demonstrates their commitment to the deal. A solid down payment is crucial, and while the exact amount can vary, a range of 15-25% is typically considered reasonable by most lenders.

3. What’s the Plan If Client Attrition Is Higher Than Expected?

Many buyers base their purchase decision on projected collections in the first few years, but this strategy places most of the risk on the seller. While sellers should offer guidance and support during the transition, the buyer ultimately controls client retention. Both parties should understand this dynamic and find ways to mitigate the risks involved.

4. What’s My Role in Ensuring the Buyer’s Success?

There’s often a misunderstanding that sellers need to stay involved for long periods after the sale. However, most transitions can be completed in 24 months with the seller’s support. Prolonging involvement beyond this can delay the buyer’s opportunity to establish crucial client relationships and move forward.

5. Have I Fully Vet the Buyer? Are They Licensed?

The seller should conduct due diligence on the buyer, including reviewing their credit history, experience running a similar practice, and their financial standing. It’s easy to assume the buyer is the only one who needs to do their homework, but it’s equally important for the seller to ensure they’re dealing with a qualified individual, particularly if they’re involved in financing the sale or guaranteeing any future payments.

6. Am I Receiving a Fair Price for My Practice?

Determining fair market value can be tricky, espssecially when you’re only negotiating with one or two buyers. Engaging a larger pool of potential buyers helps establish whether you’re getting the best possible price and terms.

7. Have We Created a Clear Plan for Transition?

The smoothest transitions occur when both buyer and seller work collaboratively, prioritizing the needs of the clients. It’s important to clearly define the seller’s role and any compensation upfront. While the buyer should lead the transition, the seller’s input can be vital for a successful handover.

8. Should I Have an Attorney Review the Agreement?

It’s always a good idea to involve a legal professional in the process, especially someone with expertise in business transactions. Though finding an attorney who combines legal skill with practical, common-sense advice can be challenging, it’s worth the effort.

9. Does My Agreement Protect Me if Things Go South?

A well-structured agreement should outline not only how the deal will unfold, but also address potential risks and unfavorable situations. Partnering with an attorney will help ensure that the agreement covers all contingencies, setting you up for success even in the event of unforeseen challenges.

10. Am I Truly Ready to Sell?

Though it may seem obvious, this is an essential question to ask yourself before signing any agreement. Many business owners believe they’re ready to sell only to find that they’re not. Are you financially prepared to step away from the practice? Will you be satisfied with your decision after the sale? Taking time to evaluate your motivations can make a world of difference in ensuring you’re making the right choice for your future.