The most important thing when selling your Bookkeeping Business (other than selecting the price) is deciding if a public or confidential campaign is right for you.
In most cases we recommend a confidential campaign because in our experience knowing a bookkeeping business is for sale can be disruptive to your staff, referral partners and clients and your competition may try to take advantage of this.
In our experience, serious buyers actually prefer bookkeeping businesses which are advertised confidentially as they can be more confident competitors aren’t trying to poach your best staff and clients after hearing the bookkeeping business is for sale.
We get it – Bookkeeping business owners like you wear many hats and wish you had more hours each day to implement your good ideas in your business. The truth is most Bookkeeping business owners get tired of being either the only person that can get the work done or if you are lucky enough to have a small team, your ‘the leader, the one behind all the good ideas and the problem solver’, and you know you can’t do it all, forever.
If you’re feeling stuck and want more clarity and control over what happens next we can help.
When it’s time to hand the baton over to the next owner, there are some important things to consider to make sure you are ready.
To maximise the chances of a successful sale you need to think clearly about what is for sale, why someone would buy your bookkeeping business, and you need to be prepared.
The truth is, that all bookkeeping business are saleable “at a price” so even if your bookkeeping business isn’t ideal for you, has some problems or isn’t very profitable, there is still someone who will want to buy your bookkeeping business so they can try to turn it around.
In fact, there is an old saying that “a good business should always be for sale at the right price”. However, as you would expect, bookkeeping business that are more profitable, have great systems and staff with a great reputation will usually sell faster, and at a higher price.
So, How Do You Sell Your Bookkeeping Business?
Get Prepared
Preparation is one of the major areas we see private sellers get wrong. Remember the 5P’s: Prior Preparation Prevents Poor Performance.
If your goal is getting your bookkeeping business sold – not just “listed” then good preparation is a must.
This is why having a checklist of what buyers will ask for is so helpful.
Our team has created the definitive checklist for selling your bookkeeping business privately in 2024 with all you need to know in an easy to tick off format.
Regardless of the reason you are selling, the fastest way to cause a buyer to lose interest in your bookkeeping business and walk away is not having the information they need available when they request it.
Once you’ve read the checklist and listed your business on the BusinessSales.com.au website, the rest of the process will be a much more straightforward experience.
Having a really well-written ad is imperative, as your ad is what a buyer will read and respond to so understanding what might interest a buyer is critical, remembering this can be done without disclosing the name or location of your bookkeeping business.
A great way to start is to make a list of the things you like about your business because chances are a buyer will like them too. Think about why you started your business and what problems you solve for your clients. It’s also a good idea to describe the unique benefits of your business, especially as it relates to your clients and the services you provide as well as the opportunities for a new owner wanting to grow the business.
You can also write about; your team, business achievements, the type of customers you service, if they are serviced remotely and customer loyalty (focus on their loyalty to the bookkeeping business rather than their loyalty to you as an individual), what sets you apart from your competition and what you have loved about the bookkeeping business.
A typical ad will only highlight your business’s best 6 attributes, your ad doesn’t need to be long. The ad shouldn’t identify your business and only needs to intrigue the buyer enough to want to find out more, not answer all their questions.
Write an ad which focuses on the benefits, not the features.
For Example:
List the top 6 features and benefits of your business, that will capture the interest and attention of buyers.
Instead of writing “systemised and professional” write “easy to manage business with a great team and systems in place that make it great for clients”.
Instead of writing “12 years in business” write “longstanding bookkeeping business that’s well known in the community with a great reputation”.
These sentences not only highlight the benefits of your bookkeeping business, but make the identity almost impossible to guess, whereas with a quick google search you would be more likely to find the bookkeeping business in your area that has been trading for 12 years.
Focus on building trust with the buyer and giving them the information they need so that they have the comfort and confidence to take the next steps.
It’s also a great idea to talk about the opportunities for growth. Even the best bookkeeping businesses have room for improvement, tell the buyer about ways they could grow the bookkeeping business. This could be as simple as a new website, adding a new service, putting on more staff or being more proactive with social media and marketing.
As the business owner you know the bookkeeping business back to front much better than the buyer and definitely better than any broker would. So don’t assume they can see the value and opportunity you see – telling them upfront about the opportunities for improvement in your bookkeeping business helps the buyer see the value and gives them a head start on taking your bookkeeping business to the next level.
Set a price for your bookkeeping business
By collating the information above and writing your advert you are ready to showcase it to a buyer and are well on the way to a successful sale.
The next step is to work out how much should I sell my bookkeeping business for?
The short answer is – it depends.
Typically, bookkeeping businesses are sold based on either a multiple of the profit they generate for an owner or sometimes the ‘cents in the dollar’ approach which is based on the revenue the business generates. The profile of your clients, how easily they can be serviced remotely and how much of the revenue the business generates is ‘recurring income’ can also play a role in achieving a higher price.
As a general guide, most bookkeeping businesses are valued at between 2.5 and 3.5x adjusted EBITDA or 2 and 2.5 x adjusted PEBITDA.
Bookkeeping practices are often sold based on a multiple of the profit they generate for an owner, not your accounting net profit. PEBITDA is the most common profit measurement for small bookkeeping practices. This is essentially the total of all personal benefits to a working owner (e.g. wages, and profit, and non-recurring personal expenses such as motor vehicles) and any non-cash expenses (e.g. depreciation) in a financial year.
An alternate “rule of thumb” methodology is the “cents in the dollar” approach providing a guide based purely on the turnover of the business. The typical bookkeeping business would often be priced between around 80 cents to $1.30 in the dollar on recurring income.
Whilst industry rules of thumb and benchmarks are a very handy guide, they don’t take into account all of the unique circumstances and attributes of your business.
You can read more about strategies for pricing your business here or if you’d like our team to help you decide on a price for your business taking into account the specifics of your bookkeeping business or make an introduction to professionals that can give you advice contact us on 1300 77 NEXT (1300 776 397) or book a time below.
Please remember that people can often have differing opinions about the value of the business, which is normal. Buyers in Australia often see risk differently to a seller and factor this perceived risk by wanting to pay a lower price. That is why it is crucial to give buyers more comfort and confidence about moving forward, because the more comfortable and confident a buyer is about the business and it performing well under their ownership, the more likely the buyer will pay you more for the business.
The only price that really matters is the price you and the buyer agree to, however by being well prepared you will likely achieve a better sale, sooner.
Thinking about selling your bookkeeping business?
Let’s face it selling your business can be tough.
Anything worthwhile is!
We’re here for you, whether you want some professional guidance to keep you on the right track, or one of our trusted professionals to take the reins – you can count on us to keep you and your business moving.
