Selling a business: Insights on a successful sale

When he first launched his business in 2012, Maurice Sucevic had no grand plans. He’d recently accepted redundancy from a corporate role and simply desired an income.

However, as is the case with many small business owners who are good at what they do, Sucevic’s business, based in Melbourne, was expanding.

BuildGrowth Accountants began with bookkeeping, before adding tax and virtual CFO services. He employed one person, then another, before a third employee joined the company. The business was cloud-based and used Xero exclusively.

As various happy clients referred other clients on to the business, and expectations and demands increased, Sucevic began enjoying his work less and less. He was managing the administration of a business, rather than doing the actual work.

“I was pulling my hair out,” he says. “I decided it was time to sell up.”

To sell or not to sell

Sucevic had met accounting business transaction advisor Kev Ryan a few years earlier and they’d had a general conversation around preparing a business for a sale. One of the most useful tips Ryan had offered was to ensure the internal systems and processes were as strong as they could be. That way, the business wouldn’t rely on any single individual’s knowledge and management.

When Sucevic decided it was time to sell, he contacted Ryan once again.

“He asked me what I planned to do after the sale,” Sucevic says. “I said, ‘I guess I’ll just go and work for someone.’ He said, ‘I’ve got a better option for you.’”

Ryan’s suggested Sucevic sell 60% of his business and hold onto 40%. The organisation that buys the 60% absorbs all of the administration responsibilities and Sucevic retains some ownership, as well as a job.

Sucevic agreed, eventually selling to The Gild Group.

“So, I’m now a joint venture partner. The Gild Group has availability to other services such as wealth and insurance, things I couldn’t do because of licensing,” he says.

“They also have a practice manager, so I don’t have to worry about the hassle of the administration and practice management. I was very impressed by The Gild Group from the beginning. It was a fantastic fit.”

Preparing the business for sale

By the time he made the decision to sell, Sucevic says BuildGrowth Accountants was already well prepared.

“I had workflow systems. I had procedures in place,” he says.

“I had all of my clients on fixed fees on recurring billing. That meant we knew exactly what revenue was coming out of the business so any buyer would have access to what they needed to know.”

Sucevic was lucky – the systems he was using, Gild Group was using as well.

“Anything it wanted to know, I could simply pull down a list – not with client names at that stage, of course, but a list with the relevant information. I could show how many hours we were working on each account and dissect other information,” he says.

Then, Sucevic says, it was simply a matter of agreeing a price and assuring the buyer that he still had a growth mindset.

“If I wanted to plod along and keep the business at the same size, we were probably not the right fit.”

Agreeing on a value

Figuring out a value for the business was the easy part, Sucevic says. The agreement from the very beginning was a dollar for dollar value according to revenue.

So, if revenue over the last 12 months was $500,000, for example, that was also the value of the business.

“Someone at some point well before my time came up with an industry yardstick of cents-in-the-dollar,” Ryan says. “But in modern times it’s now definitely dollar-for-dollar as a starting point. In fact, I don't believe I’ve been involved in a transaction under that starting point.”

Sucevic says it’s important to remember that value, for the seller, is about a lot more than the dollar figure.

“You have to check your ego at the door and realise it is a negotiation, and at the same time realise why you’re selling,” he says. “You want to be in a better place after the sale, and that itself is worth its weight in gold.”

Informing staff and clients

Staff members are often a very important part of a sale. It’s not just the clients the buyer is interested in, it’s also the relationships, talent and knowledge of the business’s staff.

“I spoke with my staff once we knew it was going ahead, once we had signed terms,” Sucevic says.

Ryan advises that a seller proceeds with great caution when it comes to informing staff of the sale.

“In smaller firms, a key team member may actually hold all the cards, that is the client relationships, and not the sole practitioner as they might believe,” Ryan says.

“This is a vital vendor due diligence item where employment agreements with solid restraint-of-trade types of clauses go a long way.”

Similarly, discussions with clients were vital for Sucevic. These began as early as possible.

“I had initial discussions, personal conversations, with key clients to let them know what I was doing. I let them know I wasn’t going anywhere, that I’d still be their point of contact,” he says.

“It was important for me to introduce them to, and engage them with, The Gild Group. Not everyone came across – I was going from being a sole practitioner to a bigger company. But most were very happy.”

He sold because, in his words, he was being pulled from pillar to post.

“I could probably offer more personalised service to my clients after the sale.”

Now the sale is done, Sucevic says, of course there are still challenges, pressures and goals. He is still a part of a business that is seeking growth.

“There is a focus on growing the book and I actually have more targets now,” he says. “But I’m doing a lot less of the admin stuff that drove me mad, so that is a very good result.”

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