How does buying a law firm work?
The number of attorney’s facing retirement continues to grow. Successful practices need to be preserved and our transition-based exchange of value helps align both parties to make it a mutual goal for success after closing. If you are looking to grow then acquisition is a tremendous opportunity.
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.
How do you value a law practice?
Every Law Practice Has A Separate And Marketable Value Of Its Own
Big or small, every law practice has some level of value. The question is how much exactly? Like any other business, each law practice has a separate and marketable value of its own. The lawyer has built and managed to grow a proven business model. The tasks that were difficult years ago when that lawyer started his or her practice are no longer obstacles, but instead they have been solved with the client base, employees, processes, checklists, knowledge base, software and numerous other elements, that make up the now normal daily operations. All of those resources have value to someone who doesn’t have to repeat those ‘fun’ exercises of experimenting with software, training employees and all the other challenges.
However, the biggest impact on value that a lawyer or his or her practice can offer is the ongoing and future access to contacts, referral sources and clients along with the trust and comfort they have with that lawyer, his or her team and their overall practice. In a nutshell, that proven business platform along with the expectation that the clients will keep coming and the referral sources will keep referring (with a little transition help) and the accompanying revenues will produce the measure of a law practice’s value.
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What’s the process for buying a law firm?