This is the second in a two part series addressing the idea of selling your law practice as part of a succession plan. Part one addressed
issues related to defining personal objectives, compliance with local bar rules, and practice valuation.
In this post we will look at three remaining considerations:
- Finding a buyer,
- Negotiating the transaction; and
- Transitioning client relationships
Finding a buyer
There are a number of approaches to identifying the right buyer for your practice. At the outset we should emphasize that your local bar rules may influence your choice; so be certain to thoroughly explore them before proceeding.
A simple advertisement in any of the bar journals or practice specific publications is a reasonably cost effective means of reaching potential targets. If you go down this road it pays to be aware that this is a bit of a shot-gun approach. Your plan will need to include an initial vetting process. Otherwise, depending on the size of your market and the practice you wish to sell, you could find yourself spending a lot of time fielding unproductive inquiries. The more targeted your advertising can be, the better.
Competitors – Direct Approach
As is the case with most marketing efforts, the sooner you get face-to-face with a qualified target, the better. So your most fertile ground may be competitors, or those engaged in a complementary practice. Approaching these individuals or firms directly can expedite the process if interests and objectives are aligned. So some homework here can prove beneficial.
Just like in lateral attorney recruiting, search firms are a possible means of reaching potential buyers. Once again, you can streamline the process if you have clear objectives outlined.
Maybe the most overlooked and very frequently the best target for the sale of your practice is someone within your own firm. This greatly simplifies relationship transition.
Negotiating the Transaction
There a three keys to negotiating the transaction.
- Valuing the practice in a fair and understandable manner.
- Structuring a payout that is affordable for the buyer and acceptable to the seller and
- Minimizing buyer risk through facilitating client retention
Like so many things, experience in negotiating these types of transactions is very valuable to both the buyer and seller. If you haven’t personally been involved in a law firm sale, get some experienced help.
Transitioning Client Relationships
The absolute key to making a sale transaction successful for both parties is the movement of client relationships to the new owner for the long term. A well thought out approach that begins with an introduction and eases the clients into working with the new owner is often most successful.
What are you doing to prepare for the ultimate transition of your practice?