How is a law firm valued?

Buyers price predictable, transferable profit rather than turnover. They look at maintainable earnings by department, the working capital tied up in work in progress and debtors, how much of the fee income depends on the departing owner, and whether the client account and regulatory position are clean. Clean monthly management information over several years is the evidence that supports the number.

How long before a sale should we start preparing?

Three years is a realistic run up, because the strongest evidence is a consistent monthly record and that cannot be created retrospectively. Two years is workable. Starting six months before going to market usually means accepting a discount for uncertainty.

Does high lock up affect what our firm is worth?

Yes, directly. Work in progress and debtors are working capital the buyer has to fund from day one, so high lock up either comes off the headline price or ends up in a deferred structure. Bringing lock up down is one of the fastest ways to improve a valuation.

An empty office at dusk, chair pushed in behind a clear desk

For owners looking ahead

What is the firm
actually worth?

Not what somebody told you at a conference. Not a multiple of turnover. What a buyer would pay, on the evidence you could put in front of them today.

Find out where you stand

Value is built over years and measured once, right at the end

A buyer is pricing one thing: whether the cash keeps arriving after you have gone. Every month where the only person who really understands the firm is the person selling it is a month of proof you did not build.

Most owners arrive at that conversation with three sets of statutory accounts and a very good story about why one of the years was unusual. The story may well be true. It is not evidence, and nobody is paying for stories.

What a buyer will look for, and what we put in place

Three years of clean monthly numbers

Consistent, reconciled and explicable. The single most valuable thing you can build, and it can only be built with time.

Profit by department, not in total

A buyer wants to know which parts of the firm they are buying. A blended total invites them to discount the lot.

Lock up under control

Work in progress and debtors are working capital a buyer has to fund. High lock up comes straight off the price.

Client account beyond question

Reconciled, evidenced, Accountant's Reports clean. A problem here does not reduce the price, it ends the deal.

Key person risk reduced

Fee earners with their own relationships, documented processes, and a firm that is describable without you in the room.

A defensible number

What it is worth now, what moves it, and what two more years of the right evidence would do to it.

Why us

We have sat on both sides of this

Built and sold professional services firms

Our partner Reuben Glynn FCCA, KPMG trained, built two costs businesses and sold both to Frenkel Topping Group. He knows what a buyer actually looks at.

Inside a law firm, not just advising one

Andrew was Head of Finance at a solicitors' practice in a fee earning capacity. Client account, lock up and the Accounts Rules done first hand.

Regulated, and signed

A firm of Chartered Management Accountants regulated directly by CIMA and AML supervised. A qualified accountant reviews and signs every output.

Thirty minutes, and an honest answer

Tell us about the firm and where you think you are heading. We will tell you straight what the number probably looks like today and what would move it. No presentation, nothing to prepare.

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What is the firmactually worth?