By Niamh Tracey | 9 August, 2023
The hidden cost for clients who keep their accountants in the dark
Businesses looking to sell up without seeking counsel from their accountant could find themselves significantly out of pocket, writes Norman Younger.
As somebody who interacts with practising accountants on a daily basis, a recurring theme is that clients keep them in the dark when it comes to what is often their biggest business decision – exiting their business and retiring.
Given that their accountant is supposed to be their trusted business adviser it is worth asking why this is so, but for now, let us look at the folly of this approach.
An attractive prospect?
There are two main reasons why a DIY approach by clients is potentially disastrous financially. Firstly, and most importantly, is the question of whether the business is actually “sales-ready”. Can it be successfully presented to the market or will it join the ranks of companies that fail to sell?
Owners of apparently successful businesses are blind to underlying problems, or issues that will turn away buyers once they take even a cursory look at the accounts, let alone a deep dive during due diligence.
Sorting out problems usually takes time, maybe years, and by the time it becomes apparent sellers are worn down and either sell cheap or the company closes when they retire.
Had their accountant been brought into the process prior to firing the starting gun, issues would have been identified and remedial action taken so that the business will sell quickly and at the best price.
A well-connected profession
Secondly, many accountants have a relationship with a broker or could help identify the right broker for that business.
Not all brokers are equal.
Some have greater exposure to the ”right” type of buyers and others offer a more personal service that is better suited to the seller. Sellers may actually decide not to use a broker at all, something an accountant should counsel against. The advantages of using a broker will be discussed in the third article in this series.
Returning to the question of why accountants are overlooked, it is because they are not engaging with their clients on the subject. Whether the accountant has direct experience or can recommend a broker, if they don’t shout about it why should the client approach their accountant?
After all, their trusted business adviser has never made mention of it, they only talk about tax planning and year end preparations!
Source: Accounting Web