Q. When I sell my Practice, how long am I expected to stay with the Buyer?
A. Most Purchase Agreements call for the Seller to work with the Purchaser for ninety days without pay as part of the transition. After that, by mutual agreement, if the Seller continues to work in the Practice (quite often during tax season), the Seller is compensated at a fair hourly rate or percentage of tax returns prepared.

Q. How does an "Earnout" work?
A. Simply stated, when a Practice is sold using the Earnout method, the Seller turns over the Practice and its clients to a "Purchaser", and is paid a percentage of the Purchasers collections for those clients over a period of time - like 20% each year for five years.

Whats wrong with it?
For the sole practitioner, several things:

1. There is no fixed price. You never know what the real "selling price" of the practice is until the last payment is made.
2. There is no Promissory Note to guarantee payment.
3. There is no payment of interest for financing the sale and carrying the debt.
4. There is normal loss of clients over the payout period due to natural attrition. This will lower the expected payments.
5. Finally, there are unforeseen problems: the Purchaser culling out unwanted clients; suffering disablement, death, divorce or just disillusionment - any of which can drastically reduce the Practice Earnout payments to the Seller.

However, there are places for the Earnout method:
Where there is the unexpected death of a Practitioner, it is usally the only way a Practice can be sold. Also, in larger firms, when a Partner retires, it is often the method used to buy back the Partner's interest.

Q. Can I continue to do taxes for family and friends after the sale?
A. Most certainly - but this must be covered in the Covenant Not To Compete that you will be asked to sign. Obviously, the family and friends' names must be removed from the Tax Client Schedule and a statement regarding your intentions must be included. Most often the Covenant only covers the scheduled Clients (both Accounting and Tax), for a period of five years and a distance of 50-75 miles from the Practice Location.

Q. What keeps my Clients and Competition from knowing that I am selling my Practice?
There are several steps we take to make sure this doesn't happen:

1. Once we do the valuation and you agree to the price your Practice will be offered for, we put together a Practice Profile that provides enough information for a Purchaser to know if he or she is interested.
2. At the same time we gather both financial and professional information from the Purchaser for your review and approval.
3. When an approved Purchaser requests the identity of the Practice, he or she signs an enforceable Confidentiality Agreement whereby they agree not to disclose any information they have or the fact that the Practice is for sale.
4. If an acceptable Offer is received, along with a substantial deposit, the next step is the verification of books and records, and a final signing of the Agreement - all without your Clients and Employees being aware. At this point, we provide a Transition Outline and suggested notices and letters for both Clients and your Employees.