Art of Accounting: Selling a practice and still running it

September 6, 2022

By Edward Mendlowitz

A lot of accountants sell their practices and hasta la vista baby! They sail into the sunset. However, some want to hang around.

Usually when a practice is sold, the seller sticks around long enough to introduce the buyer to the clients and assures the client they will be available if any problems develop or to field calls when necessary. This is usually for a three-month period and there is no compensation for this. However, it also assumes the seller is not going to do any work or perform any specific services.

If services are going to be performed, there should be compensation for that. Occasionally, problems develop defining exactly what those services are and how they should be compensated. I believe no services should be performed unless there is an agreement from the buyer. That sounds easy, but it isn't so simple. I know of many instances where the seller continues performing some work and then, after quite a bit of time has accumulated, requests payment. This serves no one's interest. It thwarts the transfer of "control" to the buyer, reduces the overall client retention and can confuse clients and staff. To avoid this, purchase agreements should be very clear about this. Further, in the absence of clear instructions, and/or as soon as the buyer notices this, the seller should be told to stop the work and to explain why they did the work without informing the buyer, and what other client services the buyer wasn't informed about.

Read the full article on accountingtoday.com

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