Many of my clients have achieved great satisfaction in building profitable practices from humble beginnings, often dealing with challenging circumstances along the way.
But the greatest satisfaction for my clients often follows a successful practice sale or merger. A profitable and successful deal is the ultimate reward for hard work and substantial investment.
I have been fortunate to work with many legal practice owners over more than 18 years as a professional services and business lawyer. In my experience, a successful sale or merger relies heavily on preparation and getting small details right. Make sure you don’t get caught out.
The top 10 common mistakes to avoid:
- Some legal practice owners get overwhelmed by the process and details of the sale/merger, such as how and what they will sell or merge and for what price. They decide early on that it is too hard to sell or merge. They never achieve a successful sale or merger. They have glossed over the fundamental question of why they want to sell or merge. Asking the why question and setting goals gives legal practice owners the drive and focus to achieve a successful deal.
- Some practice owners spend so much time working in their practice that they lose sight of what would make their practice valuable in the eyes of prospective buyers or merger partners, and what assets a prospective acquirer will be willing to pay for. Professionals who own their own practices don’t put enough focus on working on their practice to make it attractive to potential buyers or merger partners, and place too much value on their personal contributions.
- Legal practice owners sometimes have a predetermined or narrow view of who the most likely buyer or merger partner for their practice would be. It is a mistake to discount a potentially broader field of buyers or merger partners.
- Some legal practice owners who have had success in running their own practices believe that they can be equally successful in handling the sale or merger of their practice on their own. Perhaps the biggest mistake that a practice owner can make is not getting appropriate professional advice to help them navigate the complexities of the sale or merger process.
- Most businesses are rarely ready for sale or merger all of the time. Many legal practice owners don’t have a strategy or don’t give themselves enough time to get their practice ready before they decide or are forced to sell, or receive an approach from a prospective buyer or merger partner.
- Many practice owners are unable or unprepared to explain the things that make their practice valuable and attractive to prospective buyers or merger partners.
- Practice owners who decide to embark on a sale or merger process sometimes don’t take the necessary steps to adequately protect their confidential information and maintain the confidential nature of the sale process.
- Sellers place their interests at great risk if they agree on terms with a prospective buyer but fail to have the terms documented in writing in a legally enforceable contract.
- Many practice owners spend years building successful practices, but put their personal wealth at risk with poor planning and management of their personal affairs.
- Some practice owners mistakenly believe that their job is done when a sale or merger contract is signed. In fact, there are often many tasks that a practice owner needs to attend to before a sale or merger transaction can be completed.
In my experience, a successful sale or merger relies heavily on preparation and small details. Make sure you don’t get caught out.
If you are thinking of selling or merging your legal practice and want to learn more about avoiding these mistakes, Rohan Harris, Principal at Russell Kennedy Lawyers, has created a step-by-step guide to getting your legal practice ready. The booklet and webinar will give you the tools that will help you plan and prepare for your own successful deal and also includes the 10 common mistakes to avoid. You can download the booklet and view the webinar here.