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How to succeed at succession

Briefs

Cite as: September 2012 86 (09) LIJ, p.13.

Lawyer Ron Rowe didn’t want to work every day until he died. His father passed aged 67, and his mother at 69, so when he turned 68 Mr Rowe decided to sell the law practice he had operated in Camberwell for more than 40 years – as a partnership and then as a sole practitioner.

“I wanted to start enjoying the fruits of my labour,” he said.

At first Mr Rowe, then president of the Eastern Suburbs Law Association, contacted some acquaintances he thought might be interested in buying but when nothing came of it he hired a broker.

Mr Rowe said his practice had some appealing assets including a top location, good staff and a landlord happy to lease to a new owner.

He said a software practice management system meant he was able to show prospective buyers “at the touch of a button” that the business was profitable.

“That’s important because a buyer wants to see facts and figures,” he said.

Mr Rowe said his broker had advised him that the majority of vendors failed to have such figures readily available, which could delay a sale or completely deter a buyer.

He said the broker, who found three interested parties one of whom ended up buying the practice, had been a valuable investment.

LIV council member Bruce Pippett said he believed it was “probably essential that people try and go through brokers” when selling a practice. Mr Pippett, 62, sold his small Brighton practice of seven years in March after becoming “a bit tired of working so much and of all the stress that comes with running a practice”.

It took nine months for the right buyer to come along and at times Mr Pippett feared he would end up simply having to shut-up shop.

But his broker’s perseverance paid off when a young lawyer bought the practice within the price range Mr Pippett had set.

Mr Pippett, who used an accounting software package, said he was able to provide a clear and honest picture of the practice’s financial position to prospective buyers.

“I think it’s vital that you have that sort of information [profit and loss statements] at your fingertips,” he said.

Despite selling his business, Mr Pippett continues to do legal work from home, extensive reading and work on a novel he is writing.

Mr Rowe is focusing on playing tennis, socialising and travelling.

While Mr Rowe and Mr Pippett both had good luck in quickly selling their practices, not all lawyers who decide to sell late are so lucky.

LIV president Michael Holcroft said: “Planned succession will always achieve a better result than unplanned succession,” The LIV is running a series of workshops on succession planning in 2012 and 2013 in Melbourne and at suburban and country locations. “The LIV workshops will help you identify what buyers will be looking for and how to add value to your business,” Mr Holcroft said. “A good business broker should add further value. You wouldn’t sell your house yourself so why would you sell your own business, learn from the experience of others.”

Members can also refer to the LIV’s online Succession Planning guidebook for help in how to sell, merge or acquire a small to medium-sized practice.

For workshop dates and to answer LIV’s diagnostic questionnaire on succession visit tinyurl.com/79v8mq7.

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