I am a 64 year old solo practitioner in Arlington, Virginia. There are no other attorneys in the firm – I have one legal assistant. My practice is concentrated in estate planning and estate administration. I have just started giving thought to retirement and what to do with my practice. I want to provide continuity for my clients, security for my employee, and salvage any sweat equity from my practice if there is even such a thing? Personally, I question whether there is any potential for receiving any value from the practice – I think when you are done – you are done? What are your thoughts?
It all depends upon the practice, not waiting too long, and finding the right WHO. About a year ago I had this discussion with an owner of a practice and he held the position that when you are done – you are done. However, after we assisted him with a year-long hunt – he successfully sold his practice for a multiple of 1.0 times average of the last five years fee revenue with 85% paid at closing and the remainder paid out over three years.
Another sole owner recently sold a practice for $50,000 at closing and 20% of gross practice revenue for five years paid when fees collected.
So I believe if you don't wait too long and take the time to look for the right WHO – value from your sweat equity can be realized.
However, if you don't do your homework and start early – you are right – when you are done – you are done.
John W. Olmstead, MBA, Ph.D, CMC