10 tips for selling your practice

22 October 2019

There are a number of issues that need to be considered in making sure your business is ready for sale. Here are 10 tips to help you.

1. Planning

Planning is critical. Getting your business ready for sale won’t happen overnight! It can take a couple of years to get all your ducks in a row, so that your business is ready for sale. You need to consider your goals and priorities.

Are you going to retire, or continue to work in the practice after you sell? What price do you expect for selling your practice?

When you are close to being ready to sell, you should consider obtaining a valuation of your business. Having a realistic expectation of what price to expect when you sell is important, as it may impact your goals and priorities.

It’s cliché and it’s true – if you fail to plan, then you are planning to fail.

2. Importance of due diligence

In any business sale, self due diligence is key. This is about investigating your own business to help you understand what the state of affairs is. When you have been busy running and growing your practice for a number of years, it can be surprising what issues due diligence may uncover that need to be addressed to make your practice as enticing as possible to buyers. It could be something simple like:

  • getting a registered lease in place;
  • getting key employees to sign an employment contract
  • updating your terms of engagement with your clients to make sure they are compliant with the ever-changing laws and regulations in the financial planning industry.Addressing these issues up-front will make the sale process easier and allow you to anticipate what will be important issues for a buyer.You may also want to undertake due diligence on a potential buyer, to make sure they can pay your price and understand what plans they have for your staff and clients.

3. Due diligence: What to look at

There are a number of important aspects to look at in undertaking due diligence of your business. They include:

  • What is your business structure – sole trader, partnership, company, trust?
  • Do you operate from one or more leased premises?
  • What are your key liabilities and financial obligations (e.g. bank facilities)?
  • What are your key contracts? For example, are you an authorised representative of a company with an AFSL?
  • Do your key contracts contain restrictions on your ability to assign those contracts? Or do they require you to obtain consent to a change in control of the ownership of the entity that operates your practice?
  • What are your key assets? Identify all of the assets to be sold, for example, client base, goodwill, client contracts, plant and equipment, inventory, intellectual property, IT, contracts, records.
  • Does the correct entity own those assets?
  • Will any assets be excluded from a sale?
  • Are there any tax, financial services or other compliance issues?

4. Sale of business or sale of shares

One important decision to make when selling (as discussed in Matthew McKee’s article) is whether the sale will be a sale of the underlying business assets (asset sale) or the sale of the vehicle that operates the business (entity sale). An asset sale is quite different to an entity sale.

Most commonly, the sale of a financial planning practice will be an asset sale. This is usually the preference for a buyer, as they can purchase the business assets and not have to take on responsibility for the liabilities of the business prior to the sale.

In an entity sale, the buyer takes on the existing liabilities in the entity being sold.

5. Leased premises

If you lease your premises, you will need to make sure you have a signed lease in place and if the lease (including options) is three years or more, then (in New South Wales) that lease needs to be registered at the NSW Lands Registry as well. There are different regimes in other States and Territories in Australia.

Under the lease, you most likely need to obtain written consent from the landlord to either assign the lease in an asset sale or a change in control in the leasing entity being sold in an entity sale.

If you have provided a bank guarantee or a personal guarantee under the lease, then you will need the buyer to provide a replacement guarantee, so that the landlord will release your guarantee.

6. Leased assets

If you have any leased assets in your business, such as for a motor vehicle, photocopier or computers, you will need to consider whether to pay out those leases before completion of a sale, or you will need to seek consent from the financier to assign those leases to the buyer in an asset sale or a change in control in the leasing entity being sold in an entity sale.

7. Key contracts

A financial planner will either have its own AFSL or be an authorised representative of a financial services provider which has its own AFSL. In the latter situation, the agreement a financial planner enters into with its principal licence holder will be a critical agreement for the business of that financial planner.

Another key contract for a financial planner is their agreement with their clients. You should make sure these (and other key contracts) are current and properly signed. If any of these agreements are close to expiring, you should try to negotiate an extension or new agreements.

You will also need to check if these agreements require you to obtain consent for an assignment of the agreement in an asset sale or change in control in an entity sale.

8. Employees

Your key employees can be important to the value proposition for a buyer. You should make sure they have a signed employment agreement with you, with appropriate restraints and confidentiality provisions. You should also try to incentivise them to reduce the risk they will leave your business.

You will need to ensure all employee entitlements and superannuation payments are up-to-date.

9. Personal guarantees

In many small businesses, it is necessary for the principals of that business to provide personal guarantees for agreements with lenders, landlords and key suppliers. You should thoroughly check your records to make sure you are aware of any personal guarantees which have been provided.

It can be difficult to obtain a release of personal guarantees when selling your business, and in the event you are unable to obtain releases for any of them, then you will need to obtain an indemnity from the buyer for those guarantees for post-sale obligations and liabilities.

10. Privacy

In a financial planning business, you will collect personal information from your clients and employees. It is critical to ensure that you are complying with your obligations under the Privacy Act, including having a privacy policy in place which you adhere to.

You need to take care when allowing a purchaser to inspect client and employee records. You should limit disclosure to a ‘need to know’ basis and de-identify information. One thing you can do at the start of buyer due diligence, is to require the buyer to enter into a confidentiality agreement before they obtain access to your records.


There are a number of issues that need to be considered in making sure your business is ready for sale. The time to start preparing to sell your business is now!


Simon Griesz is a Partner, Commercial Law at Brown Wright Stein Lawyers. Simon is a highly experienced commercial lawyer who regularly assists accountants, financial professionals, SMEs and national companies across a variety of industries.