Buying out a practice - quick answer needed!

[Snorbenz]

Hi all.

Sorry for barging in with no introduction (I'll do one later I promise).

An accountant friend of mine who I've known for some time has been suffering with Parkinsons for some time and I've helped him out when necessary to keep ahead of deadlines. He's said for the last two years (and in his wife's hearing and with her agreement) that he wanted me to take over the practice at no cost when he decided to retire, as I had been helping out, knew his clients and had brought him homemade soup when he was really unwell.

Well, the time has come to retire and he was being as good as his word until his son decided to take out power of attorney and has practically accused me of trying to steal the practice. His mother has told him to behave himself and that it is his father's wish that I should take his clients into my practice.

I'm not in a financial position to buy out the practice and my friend knows that. It looks like, to keep the peace with the son, that I shall have to offer a % of the fees earned from these clients to be paid as and when I charge the client. This could be over one or two years. So if, for example, we decided on 10% it would be 10% of fees charged over one year or 5% of fees charged over two years.

My problem is that (while I've mentioned 10%) I've no idea what would be a fair percentage to offer.

Anyone got any ideas?

 

[mackwaa]

Hi all.

Sorry for barging in with no introduction (I'll do one later I promise).

An accountant friend of mine who I've known for some time has been suffering with Parkinsons for some time and I've helped him out when necessary to keep ahead of deadlines. He's said for the last two years (and in his wife's hearing and with her agreement) that he wanted me to take over the practice at no cost when he decided to retire, as I had been helping out, knew his clients and had brought him homemade soup when he was really unwell.

Well, the time has come to retire and he was being as good as his word until his son decided to take out power of attorney and has practically accused me of trying to steal the practice. His mother has told him to behave himself and that it is his father's wish that I should take his clients into my practice.

I'm not in a financial position to buy out the practice and my friend knows that. It looks like, to keep the peace with the son, that I shall have to offer a % of the fees earned from these clients to be paid as and when I charge the client. This could be over one or two years. So if, for example, we decided on 10% it would be 10% of fees charged over one year or 5% of fees charged over two years.

My problem is that (while I've mentioned 10%) I've no idea what would be a fair percentage to offer.

Anyone got any ideas?

Ouch! That's a toughie.

And one I don’t think I can answer given we only have half the story, but I will say that it would depend on if the son is also an accountant, has he been working in the fathers practise, if so how long, did the father also promise the son the clients, how long have you been assisting etc?

Also the payment is only for two years and for the sake of keeping a friendship I would offer a fairly generous %age. Although, also bear in mind that the son doesn't actually have to do any work to receive this payment (unless, of course, he worked in the fathers practise for a length of time and has therefore paid his dues).

Normally only around 55%-65% of a practise or client base is retained when sold, but the charge you are suggesting is based on a %age of fees so is irrelevant. I mention it because it maybe that a significant proportion of the non-retained clients move over to the sons practise anyway.

You need to offer a arrangement where if you were walking down the street and you bump into the son you don’t feel like you have to avoid him because your negotiations are too tough, nor do you want to resent him for receiving most of your hard earned fees.

Best of luck