V4B Business Finance

Acquisition Financing Case Study – Accounting Business

Accounting loans

V4B Business Finance has a great deal of experience working with Accountants to provide financing. We love working with Accountants because just like us, they have a deep understanding of finances so we speak each other’s language. Plus, accountants love geeking out over numbers and data as much as we do… maybe more.

One of our accounting clients came to us in need of a £200,000 loan to help them purchase another local accountancy practice. The goal was to immediately increase their client numbers and billing with a single investment. This was a great opportunity but they did not have time to wait around or jump through hoops to get a loan. The other company was ready to sell so they needed to be ready to invest.

When considering any acquisition like this, we always give our clients some general advice to help them along the way. The first thing we talk about is the handover period. This is crucial as it gives the buyer time to understand the new business and ask questions of the seller. It also helps retain clients by smoothing the transition and ensuring nothing gets lost in translation. In general 12 months of handover time is adequate.

It is also generally a good idea to have the ability to amend the purchase agreement at the end of the 12 months so you pay for what has actually been retained rather than what was being sold at the start of the handover. This incentivises the seller to help you keep clients on board. At the end of the handover period, you can then make your payments and take full control of your new clients. Plus, when you acquire the firm, you can write off the goodwill over time to further reduce your tax burden.

Tailored Business Loan

We got our clients the money they needed to purchase the accountancy practice which meant they could immediately start the handover process. This allowed our customer to respond quickly and secure the best offer while still leaving plenty of time to get to know the new clients. This loan also allowed the practice to keep more liquid assets on hand to cover unexpected expenses. That was incredibly important as any acquisition is bound to have some unexpected issues. Our loan also allows the firm to pay the loan amount back over 6 years so they will be able to easily budget for the payments going forward.

Results

The purchase went through successfully and our client has now dramatically expanded their client base as well as their billing. Because the target practice was similar to the purchasing practice, it was easy to transfer the new clients into the existing portfolio without changing the dynamics of the firm. Our client was also able to meet with the staff and customers of their new practice face to face in many cases to help get a feel for everything and better manage the business.

Takeaways

Many business owners are nervous to grow their company through an acquisition. They may want to focus on organic growth or are worried that the new company will not be a good fit. Just remember that in an acquisition, you are in charge. If you speak to someone about their practice and it is local and fits in well with what your firm does, why not? Sometimes staff that can help with the work are already included in the deal so you are not overstretching yourself. Alternatively, you can recruit someone to manage the workload for you.
At the moment, there have never been as many acquisitions available and opportunities for firms to acquire another business. Sometimes sellers are cashing out for health reasons, retirement, or the previous owners just want to go in a different direction. They may even be willing to just sell off a block of client fees in a particular location
If you are thinking of taking the leap and acquiring an existing business, our loans can help you spread the cost on a monthly basis over a number of years while freeing up your cash flow. Our loan experts will work with you to get the amount you need over the term that best suits your needs.

  • Fast access to funds
  • Flexible payment options
  • Dedicated account managers
  • Smooth your cash flow
  • No arrangement fees
  • Gain more budgetary control
Share the Post:

Related Posts

Growth Guarantee Scheme

Transitioning from Recovery Loan Scheme to Growth Guarantee Scheme: What You Need to Know

As the financial landscape evolves, so do the opportunities available to help businesses grow and succeed. On 1st July 2024, the Growth Guarantee Scheme will replace the Recovery Loan Scheme, offering enhanced support and flexibility for UK businesses. With increased loan limits, more flexible terms, and broader eligibility criteria, the Growth Guarantee Scheme is designed to foster long-term business expansion and innovation. At Business Finance V4B, we’re here to guide you through this transition and help you secure the funding needed to achieve your growth ambitions.

Read More
Finance professionals discussing financial reports during a mid-year review meeting.

The Importance of Mid-Year Financial Reviews for Finance Departments

Mid-year financial reviews are crucial for finance departments to ensure business success. These reviews provide an opportunity to assess performance, manage cash flow, revise budgets, plan strategically, and mitigate risks. By conducting thorough mid-year reviews, finance teams can identify areas needing adjustment, make informed decisions, and align financial strategies with business goals. Learn more about how to conduct effective mid-year financial reviews and their benefits for your company’s financial health.

Read More

Join Our Newsletter