A Happy New Year to Everyone!
2021, [YR2 of C19], was another year that most of us are very happy to say goodbye to… but a big “HELLO” to 2022 – May it be a prosperous and healthy one for everybody.
Covid aside, 2021 was a good year for the Accountancy Industry and for the Buying / Selling and or Merging of Accounting Practices.
With over 30 years of selling Accountancy Firms, the numbers tell the story.
In 2021 Jadeja Partners achieved its highest ever valuations (Cents in the dollar) and multiples (EBIT-Partner Salary x ‘X’). We don’t see it stopping or changing anytime soon – It’s the most bullish market to date but can it go higher? We think so.
‘YES – It is STILL a SELLERS’ MARKET’
DIVESTMENT STRATEGIES – let’s be mindful here, very mindful.
There are a large number of BUYERS going to market with an array of buyout options, packaged to de-risk the Investment. Some are interesting, some are scary, some may just suit what you are looking for. It’s best to know your options.
Be aware of buyout offers or schemes that seem too good to be true – remember the fine print, read it, understand it.
Transaction terms can continue beyond the ‘Heads of Agreement’. The contract is also a part of the NEGOTIATION in some game plans. Don’t get blinded by the big number and just skim the terms in the contract .
Upfront Component Adjusters, Revenue Targets, Profitability Targets, Staffing Retention, Management Fees are some areas buyers may try to negotiate in. Note the move, consider the future best and worse case ramifications and field test before answering positively or negatively.
A simple deduction process might be the following questioning process:
- Who has the balance of power going forward?
- What are both sides, really, willing to risk?
- Has there been a ‘goal post’ move?
- Am I / Are we missing an obvious blindspot?
- Is the deal generally a healthy and fair one?
Both sides need to be comfortable in asking the question(s). If not, one should seriously ponder, is this ‘really’ healthy, will the basis of ongoing communication have questionable gaps and most importantly, is this truly a cultural fit or just a house of cards?
‘Confirmation BIAS’ can be a dangerous narrative, we unfortunately see it a lot – stay flexible and talk to everyone you can.
If you would like a FREE Valuation or a Confidential Discussion about Divestment Strategies, please contact us:
Magnus Yoshikawa
Mobile: 0408 885 944
Email: magnus@jadejapartners.com
