Why Do Solicitors Attract Such Low Multiples When Selling Their Law Firms?

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.

Selling Your Law Firm For The Maximum Price
Selling Your Law Firm For The Maximum Price

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?

Whichever position you find yourself in, enter your details below now to find out about how to ensure that you receive the best offers for your law firm.

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Legal Marketing Services

Case Study

From biggest fee earner to no fee earning whilst doubling turnover

I’d been looking for somebody to help me with marketing for a while, and I came across Nick on Google.

That was three years ago, and in that time it’s fair to say that he’s had a massive impact on my business, and my life as a result.

In the early days, my goal was simple and specific: increase the turnover of the business so that I could take more money out of the business.

I had an amount in mind, and I expected it to take years to get there, but when I achieved it in just six months, it began to dawn on me that this guy really knew what he was talking about.

As a result of that early success, and with Nick’s help, I realised that my expectations were too low, and what I could actually achieve, with the right thinking and guidance, was far beyond what I’d ever imagined.

What Nick saw – and what he made me see – was that my business had fantastic potential, but to realise that potential, things needed to change.

Even before Nick got involved, we were getting a decent volume of leads, but it was what was happening to the leads that was the problem.

We weren’t tracking them, there was no process in place and to top it all off, we didn’t have a clear pricing structure, which meant that we were nowhere near as profitable as we could be.

And that’s where Nick came into his own. He built us a bespoke lead generation and sales process, and the results were staggering.

We pretty much doubled our turnover, allowing me to build a four-person sales and marketing team that gets us more leads and more sales.

Of course, Nick’s Google Adwords expertise has been a key part of our growth, and today it’s a hugely profitable marketing pillar for us.

But regardless of the medias or mechanisms we’ve used to grow over the last three years, it’s been Nick’s rock solid marketing plan that underpins it all.

He’s stopped me trying this and that, and got me to focus on the things that’ll have the biggest impact on the business.

And I think there’s a lot more to come – we still haven’t implemented everything that Nick has given us to do, and when we do, I reckon we’ve got around another £250,000 of revenue per year to add to our figures.

And it’s not just the business that’s seen a transformation – it’s been a personal transformation too.

When Nick first got involved, I was the biggest fee earner, and consequently I was reluctant to stop getting involved in cases.

Nick eventually made me see that if I was serious about growing this business, that needed to change and as time has gone on I’ve taken on less and less work – now I don’t do any of it.

And I only wish I’d done it earlier, because the result has been me having more time to build the business, and spending time with the people that are important to me.

Not only that, but the business is stronger, because it’s much less dependent on me.

Nick was right about that one, as he has been about pretty much everything else – it pains me to say it, but it’s true!