Client Background
A sole proprietor accounting and tax preparation firm with a longstanding client base was preparing for the owner’s retirement. The owner wanted to sell the business but needed an accurate valuation to attract buyers and structure a profitable exit strategy. The client hired Development Theory to help with an exit plan for an accounting firm.
The Challenge
Client Retention Risk: The business was heavily reliant on the owner’s personal relationships with clients.
Recurring vs. Seasonal Revenue: Tax prep services generated high seasonal revenue, while accounting services brought in consistent but lower monthly income.
Limited Physical Assets: Unlike retail or manufacturing businesses, most value was tied to intangible assets (client contracts and goodwill).
No Formal Valuation Record: The owner had never valued the business before, making it difficult to justify a selling price.
Our Approach
To develop an effective exit plan, we conducted:
Business Valuation: Determining the fair market value using Seller Discretionary Earnings (SDE), Discounted Cash Flow (DCF), and Market Approach.
Client Retention Strategy: Implementing a transition plan to introduce the buyer to clients over time.
Deal Structure Planning: Developing options for lump sum sales, installment payments, and partial stake sales.
Exit Tax Planning: Evaluating capital gains tax implications and structuring the deal to minimize tax burden.
Buyer Attraction Strategy: Identifying target buyers and positioning the firm as a desirable acquisition.
The Solution
An exit plan roadmap ensuring the owner could sell while keeping consulting rights for a transition period.
A structured transition agreement to help retain clients post-sale.
A valuation report justifying the selling price and making the firm more attractive to buyers.
Guidance on negotiation strategies to ensure the owner maximized their financial outcome.
Results & Impact
The firm sold for 18% higher than the initial asking price due to the structured exit strategy.
A smooth ownership transition was put in place, retaining over 95% of existing clients.
The buyer secured SBA financing, using the exit plan and valuation report as part of the loan application.
Client Feedback
"I was worried about selling my business and whether my clients would stay. The exit plan made everything clear and structured, helping me sell at a great price while ensuring my clients were taken care of."
Development Theory Can Help Business Owners Like You
Looking to retire one day like this business owner? Our Exit Planning service provides you with an estimate of your business's current value and insights on how to leverage that value to retire. Don't miss out on the opportunity to plan for your future.
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