1. Timing. You have spent much or all of your professional life developing your law practice. Only you know when the time is right; however, you have to be honest with yourself. If you are not ready, this will not work. When you are ready, you must be “all-in”. That includes support from your business partners and life partners, i.e., your spouse and family. However, in any scenario, if you may sell your practice someday, then it is never too early to begin thinking about your eventual transition or exit strategy.
2. Preparation. Building your practice and getting it ready for sale takes time and effort. There are several important operational, financial, and legal factors that better prepare you for a sale. Scalable operations will increase the attractiveness of your law practice. How efficient are your operations? Are you using practice management software? Financially, are your books in order? Do you have recurring revenue streams, either via repeat clients, trusted referral sources, or a marketing plan? Legally, do you have agreements in place with key employees? Do you have professional liability insurance in place?
3. Negotiation. You will want to negotiate the best deal you can, but it must be a win/win for both you and the buyer. Regardless of what you think the value of your firm is, it is only worth what someone else will pay for it. We can help you with creative, non-standard arrangements that could help effect a sale of your practice while also providing long-term financial comfort for you and your family. Negotiations often center on “valuation”. There is no standard valuation methodology with law firms, but many factors will be relevant, including: revenue, profit/net income, location, history of the practice, the longevity of the revenue and earnings cycle, reputation, branding, etc.
4. Transition. Depending on the arrangement, there may be a post-transaction transition period, during which you must help the buyer develop a rapport with your clientele. It is also important that there be a proper integration into the new firm environment. Most deals succeed or fail during this transition/integration period, and your involvement in this process is typically we would heavily negotiate during the process.
If you are interested in selling your law practice, or need assistance with any of your other law firm consulting needs, please contact Fournier Legal Services at email@example.com or 860.670.3535 now for a free consultation and planning session.