Maximizing the Sale Price of Your Law Firm Avoiding the Common Mistakes Sellers Make That Reduce Valuation at the Time of Sale

Avoiding the Common Mistakes Sellers Make That Reduce Valuation at the Time of Sale

There are many reasons that a potential buyer of your law firm or collection agency will pay you less than your firm is worth. The biggest reason will be your decline of revenue. During the merger process, the mountain of documents and information requested by the potential buyer overwhelms many owners. During this period of time, the managing partner or owner is distracted from their daily affairs and often this person is the “rainmaker” for the firm. When this happens, revenue begins to decline and the potential buyer begins to reduce his or her offer

There are other reasons for the decline of revenue within a firm that is going through or considering a merger. Many of those are directly related to the staff’s knowledge of or rumors of the potential sale of the business. As the documents are gathered for the potential buyer to review it becomes more and more likely that current staff will be involved and will begin to ask questions and start sale rumors.

As a business owner you should continue to focus on the daily affairs of your business while a team works to provide the potential buyer with the due diligence documents required. This can be done in two ways; the first is to create an environment of open information by informing your staff of the potential merger or acquisition and asking for their buy-in to the process. There are many problems with this potential process as many employees will see this as a negative event and begin to focus on finding another job. Many others will just be distracted by the unknowns and be far less effective. Only a very strong business culture can withstand this without decline in revenue and productivity.

Another way to handle this need is to hire an outside consultant to work with the potential buyer on your behalf. Using a third-party to polish up the firm is the direction most smart business owners will choose. Hiring a professional who is familiar with the process, needed documents and the possibly the potential buyer, will allow the owner and staff to focus on daily affairs and continue to increase the level of revenue within the company.

If you are thinking about merging or selling I would suggest that you be proactive in the process by creating your own due diligence team and putting together a due diligence package for any and all potential buyers, prior to receiving their requirements. By being proactive in creating a due diligence package you will not only locate the areas with opportunities for improvement, you will look much more professional in the face of the potential buyer. If you will take the time to polish up your business just like it was a car you were trying to sell, it will look like it is worth more money to the potential buyer.

If you are looking for a third-party to help you polish up your law firm or collection agency Lighthouse Consulting is your choice.

Phillip W. Duff

Phillip W. Duff the Founder of Lighthouse Consulting was trained in Six Sigma while working for Bombardier Capital in 2001, and is highly successful helping organizations improve their processes using the Six Sigma methodology. Mr. Duff has consulted with numerous companies over the last 10 years and has shown the ability to enact cultural change in a company. He has also initiated programs proven to drive positive revenue growth both as an employee and a consultant. His focus is to help CEO’s with a focus on growth. His knowledge of technology and background in debt collections have combined to help companies automate processes and identify which processes provide profits. Mr. Duff has also developed a unique process of initiating cultural change as a part of developing a revenue-driven atmosphere in a variety of formats. This unique philosophy and technique are unseen to date. His substantial experience in the collection industry, Six Sigma core competency and extensive industry relationships can provide you and your team a matchless perspective into your accounts receivable business or any business strategy.

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