Helping buy into an accountancy practice: funding to become a partner

Setting up a new accountancy practice may actually present a serious financial risk. Unlike many other types of business, as a paper profession, there may only be minimal equipment needs. A computer and professional subscriptions may be technically all that is required. 

But without an office, your practice will not look very professional. That will mean renting space in a business starter hub at the minimum, plus a range of overheads, from marketing to your phone and possibly even a vehicle. You could be committing to costs of £tens of thousands in your first year, with no guarantee of a single client, or any income whatsoever.

It could take years - and continuing investment to provide working capital - before you can start to generate profits. 

As a result, many accountants will, instead, buy into an established practice. The costs involved in the purchase of a partnership in a successful practice may be high - but there will be a full list of clients to work with, providing revenue professional challenges and above all profitability from day one.

We recently helped arrange £110,000 funding to help a young accountant buy into a practice.

Partner Buy-ins

A Partner Buy-in is a common arrangement to allow a new partner to join an established practice team and allows him or her to invest in a practice:

• For the accountant, it means taking a share in a business which will deliver an agreed income, and which they can help grow  and develop
• For the practice, it can mean bringing in additional skills to help it expand and develop, and the additional investment to support those skills
• For a practice where an existing partner is retiring, it can provide a way to bring in new skills and compensate the outgoing partner

The sums involved will reflect the turnover and potential of the practice. There is usually scope for negotiation, and the most suitable type of funding for a Partner Buy-In will depend on the scale of funding agreed.

In most cases when a successful business is offering a partnership, the scale of funding required may make some form of Secured Loan necessary. It may also be possible to arrange a Practice Loan -  effectively a form of advance secured on the future performance of the business. But finding the most appropriate finance plan for your needs may require expert advice. 

Looking to buy into a practice? Find out more about funding for Partner Buy-ins

How Rangewell helped an accountant become a partner

Our client was an accountant who was offered the opportunity of buying into an existing practice close to his home.

The practice was a well-established partnership with some excellent corporate clients. He felt the prospects for the future were excellent and was happy to agree on a buy-in at £110,000. It would mean a large investment, and his savings were depleted by a recent home purchase.

It meant that we would have to work to make the funds required easily affordable. Fortunately, our expertise in the sector allowed us to provide a solution. 

First, we found a lender – a high street bank – which could lend the necessary £110,000. As an accountancy professional, they were prepared to offer him an attractive rate of 2.75% above base rate over 20 years on a capital and interest, unsecured basis.

This allowed the partnership to provide an immediate payment to the retiring partner.

Although he would still need to make a small cash contribution, this innovative approach allowed him to spread the cost of buying into the practice – and make the key step forward in his career.

The funding Rangewell arranged:

£110,000 at 2.75% above base rate 0.75%* over 20 years

Monthly £638

Annually £7,656

The process was fast, simple and - because we were able to approach lending specialists at the bank who understood the sector - done without the need for masses of information or numerous face to face meetings.

At Rangewell, we can help find better answers to all types of funding needs. Our experts work to find the most appropriate solutions while our network of contacts and our unique online tool let us find the most cost-effective rates. 

Loan, Asset Finance, Commercial Mortgage, or any other kind of finance - our expert teams find the most appropriate funding solutions while our network of lender contacts and our unique online tool let us find the most cost-effective rates. Plus, our service is independent, fast and absolutely free. So if you're looking to become partner in an existing accountancy practice, contact us to take a closer look at how Partner Buy-in Funding can help you succeed.