Mary Arranged Her Practice So She Could Spend More Time With Family, Work Remotely, and Sell Her Practice
PRIMARY GOAL: Sell her practice so she could spend more time with family.
Mary is a powerhouse lawyer. She built her very successful estate planning firm from scratch into a leader in her community. She was known, liked, trusted and relied upon in her community and had a steady flow of clients because of it.
But when Mary’s mother died, something changed for her. Mary was in her early 60’s and felt a deep need to spend more time - a lot more time - with her daughter and her granddaughters.
She wanted more than a few calls a week and a couple of visits each year. She wanted to be part of their lives. But they lived more than a thousand miles away..
So, Mary reached out to us just to see if it would be possible to sell her practice so she can achieve her goal of moving closer to them.
We took a step back and completed a comprehensive review of her practice in order to put all possibilities and risks on the table and in clear view. The purpose of The Reality Check is to make sure the attorney-owner knows the price point for the firm, the real factors that drive its value, and the risks and potential pitfalls of the different sale alternatives. Sometimes clients select a solution, but a full analysis might lead to a better alternative.
THE CHALLENGE: She didn’t know if she wanted to completely retire and was worried about cash flow.
During our discussion, Mary was ambivalent about selling her practice. It was a bit early for Mary to retire; she still loved her practice. She also loved most of her clients and had a great team.
She also worried a bit about cash flow. She had money saved but wasn’t sure it was enough. So, she hesitated to take the next step to achieve her goal of moving close to her daughter and granddaughter.
We see this often with clients who are tired of parts of their practice or whose life situation has changed. They still like some aspects of their practice and don’t want to give them up. Either that or they enjoy their practice too much to give it all up.
But the administration and other aspects of the practice eat up valuable time or, like Mary, require them to be miles away from family.
The good news is Mary had an associate attorney, Ted, who was in his early 40s and had been with the firm for four years. She had a great relationship with him, and she was happy with his work.
She specifically noted that he was very good when dealing with clients and their adult children. She felt like he was a good candidate to take over the firm if he was interested.
THE APPROACH: Add her associate as a partner, teach him how to run and grow the firm so she can work remotely, and complete a buyout in five years.
To accomplish Mary’s goal of being closer to her daughter and grandkids, we put together a two-step plan.
Ted would initially become a 49% owner of the firm. Then, at his or her election after 5 years, Ted would purchase the balance of Mary’s ownership of the firm.
During the first year, Mary would teach Ted how to run the business. After that year, she would work remotely, enabling her to move to the city where her daughter lived.
We walked through the plan with Ted who, after thinking things over, had some questions and suggestions, and ultimately agreed to it.
By setting Ted’s ownership interest above 10%, it made it possible for Ted to finance the full purchase through an SBA-guaranteed loan without Ted having to put additional money down.
In the first step of the plan, Ted purchased his 49% equity interest in the firm from Mary by giving her a promissory note. This note was paid from profit distributions based on his ownership interest.
Mary would then start showing Ted the firm's management. She also began working from home for several days at a time to test the technology and let the team see that Ted was one of the owners.
THE RESULTS: She now works remotely so she can spend more time with family while her firm continues to grow, and the sale of her firm is in process.
Since Mary moved, she’s been working remotely, including meeting with clients.
Ted and the firm’s staff are keeping things running back at the office and the firm is making more money!
Most importantly, though, Mary is spending more time with her granddaughters. She was able to reach her goal of working remotely so she can do what she loves without worrying about cash flow or the sale of the firm when she ultimately retires.
If you’re ready to sell your practice, call me at 407-649-7777 to set up your complimentary Sale Readiness Assessment.
We help lawyers increase the value of their practices by 25% or more, stop doing work they don’t like, and exit their practices in 24 months or less.
