It genuinely upsets me that often a solicitor who has worked so hard all of their life to build a practice, suddenly finds when trying to sell it that the multiple they are likely to receive when they sell their law firm is nowhere near as much as they had hoped.
Why does this happen and what can they do about it to improve the turnover multiple that they will be offered when selling their law firm?
First, it is worth thinking about a term which emanates from the legal profession; goodwill.
Goodwill used to refer to the fact that a solicitor with a lot of wills in his basement was guaranteed a good income in the future from all of the probate that would naturally flow from these wills.
Ouch – what happened to that?
A simple thing, sadly.
The world changed and most solicitors did not.
People stopped feeling obliged to go back to the solicitor that their family had always used and decided they could go where they wanted to.
This had been going on for some years, but the internet rapidly accelerated this process when it became so easy to suddenly find another solicitor to handle the probate from these wills.
But we can use the term Goodwill and still attain good multiples for the sale of your law firm. Now, however, you actually have to do a little bit of work to gain that Goodwill rather than simply expect it to land in your lap.
However, you do not have to do a huge amount of work and more importantly, nearly all of it can be outsourced so that it takes place with or without you, meaning that selling your practice becomes even more attractive.
If a prospective purchaser is met with one firm that has no Goodwill because each year the work just ‘falls in’ off the street, whilst at the same time is introduced to another firm that has shown a steady and consistent rise in new instructions for a few years (or even a few months if you follow my system) then which one is going to be more attractive to them?
It is obvious is it not?
Suddenly the owner of the firm with three or four automated marketing systems and evidence that income is rising and will continue to do so because each system is automated or outsourced is in a very strong position.
That position does not only make his law firm more attractive to the purchaser, it also means it is going to attract a much higher multiple when assessing the sales value of his or her law firm.
If you are thinking of selling your law firm now or even some years into the future, now is the time to put in place these systems to ensure that you attract the multiple that you deserve for your efforts.
If you looking to sell your firm now, what can you do to maximise the value of your law firm?
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