This guest post was written by Richard Hentworth of Industrial Business Brokers.
An accountant specialises in financial statements and number crunching, so why would a business owner ask their accountant to put on a salesperson’s hat? Below, we set out four reasons why your accountant shouldn’t sell your business.
1. Overcomplicating the Nature of the Business
An accountant can quickly transform your business profile into a book with statistics and graphs, analysis and extended stories and descriptions. Business purchasers, however, view many profiles in their search and need a simplified snapshot to see if the business is a good match for their skills and experience. If it is, they will inspect the business to discover more.
Caution: Ensure the business profile is concise and does not reveal any confidential information used to pad out the document.
Buyer’s Tip: Cut through fancy graphs and long-winded stories by highlighting key areas of interest and concern.
2. Networking and Marketing
A conveyancer can talk to lots of people who buy and sell real estate. This does not mean they have a list of active buyers or will market your business appropriately. The same goes for an accountant who is acting as an estate agent.
Caution: Check if the accountant has a compliant exclusive authority which typically lasts for 180 days. If your accountant cannot sell your business in that timeframe and seems only to discuss dealing with one party, speak to a specialised broker quickly.
Buyer’s Tip: Bid low – the chances are the accountant isn’t negotiating with anyone else.
3. Conflict of Interest
Accountants typically become involved in the sale of a business during the due diligence stage. If the accountant is also selling the business, the vendor may miss information about any issues, delays, or losing a genuine buyer.
Caution: Accountants are unlikely familiar with estate agent statutory laws and are not registered as estate agents. Be wary of an accountant asking you to get a specialised business broker to do the market appraisal and then offering to secure you a higher price.
Buyer’s Tip: Ensure you extend due diligence to include bank statements and other information to triple check financial statements.
4. Fees vs Commission
Accountants usually charge an hourly fee which can quickly add up and may not suit your budget.
Caution: A prospect’s interest may get dragged on without anything happening to ensure fees continue. Ensure the accountant is maintaining advertising and harnessing other leads.
Buyer’s Tip: Be patient in communicating over a few months as the vendor may become exhausted and give you a great deal.
In short, a business broker specialises in the sale of businesses, and an accountant specialises in financial statements. Having the right professionals perform their work respectively is the best way to ensure great results. Also, if your accountant is recommending a particular business broker, ask them if they receive a “referral fee”. If they say they work alongside another business broker or M&A firm, ask them to disclose any “commission sharing”.
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