Should I Buy A Law Practice?
The opportunities of acquiring a new practice or firm affords a would-be purchaser geographic expansion and overall growth to the existing practice. Often, when an attorney decides that it is time for his or her practice to grow, he or she will spend unnecessary amounts of time and marketing money in the efforts to effectuate that growth. If an acquisition is planned and executed properly, however, it can be an easier and more fruitful means of practice development than building through marketing or starting from scratch.
With a practice acquisition, many of the obstacles present when starting a practice have previously been overcome. A practice structure is already in place. Tangible items, such as office space, equipment and supplies, will likely be included in any deal. And, arguably most important, the purchaser instantly gains certain intangible items, including the client database, a willing staff and a referral client network. Merging practices is also a great option for an attorney that wants to offer his or her new clients a wider variety of practice areas. And while success and growth are certainly not guaranteed to follow, a well thought-out and implemented acquisition can go a long way toward achieving these important goals.
A potential purchase typically offers the same transaction structures as a sale offers the selling attorney, including merger, outright purchase, associate or junior partner buyout, and Assumption Agreements. The difference is the perspective of the buyer versus that of the seller. Regardless of which party in a given transaction you are, however, carefully planning the transaction and its implementation is very important to make sure your particular objectives are achieved.
Is NOW The Time to Buy?
A law practice owner is turning 65 every 57 seconds.
It is estimated that over 50% of law practice owners are from the Baby Boomer generation. Of these practice owners one is turning 65 every 57 seconds and that trend will continue for the next 17 years. Consider this growing number of potential attorneys looking to exit their law practices in the next several years along with the understanding that almost 90% of practice owners do not have a documented exit strategy. The future for buying opportunities begins to look better and better for those growth focused law firms and attorneys.
Where Do I Start?
1. Look Around. Regardless of whether you are looking to sell your practice or acquire another, the first step in any transition is to look at your practice and determine if it is in good order and capable of sustaining a transition. Focusing on how one will perceive your practice’s value or considering the potential of doubling your client matters overnight is great motivation to help you tackle those lingering items you have wanted to address for years.
2. Put Your Team Together. Next, continue your education on getting ready to sell or buy by seeking assistance. This includes putting together your transition advisors, which typically include your CPA, financial advisor, insurance advisor, valuation expert and your law practice broker. Yes, a law practice broker. This type of advisor focuses on the buying and selling of law practices, bringing guided expertise to navigate and exploit the marketplace even when you can’t see the for-sale signs. Confidentiality is key, so contacting and engaging someone to act on your behalf, but in the proper manner, helps make sure the transition is successful for all involved.
3. Set Specific Goals. Once you have your team in place it is time to start developing your strategy for selling, buying, merging or other transition. Set and review your goals and define your desired transaction terms; and, then your practice broker will confidentially seek out and search potentials as well as sort through the non-opportunities.
- Financial Freedom
- Flexible Schedule
- Sense of Accomplishment
- Proven Practice Model
- Acquire Trained Employees
- Predictable Revenues
- Geographic Expansion
- Improved Systems and Process
- Financial Commitment
- Failed Client Transition Plan
- Management and Legal Time Capacity for Increased Workload