So, you are about to become a co-owner of a professional services practice. How do you assess that opportunity? Even if you are well acquainted with the practice in question, there is still a lot of due diligence you will need to do. You need to assess the opportunity objectively, putting to one side how flattering that opportunity might be. Are you acquiring an interest in a practice in decline or a practice with strong and growing revenue streams? Are the existing owners on their way out the door? Or are they committed to the practice for the medium term? If you become a co-owner will the current owners relinquish control?
Questions a plenty
A good team of advisers can help you understand the opportunity and what it is likely to mean from a financial, tax and legal perspective. But the due diligence goes way beyond the legal and commercial issues that arise. There are several other critical questions you need to address:
Have you got a shared vision?
Do you share the current owners’ vision for the practice? Do they have one? And if they don’t, how confident are you in your ability to help shape a shared vision for the practice?
How will you work together?
Irrespective of what the co-ownership agreement says about how decisions are made, how decisions are really taken might vary significantly from that. It all depends on the practice culture. How well do you understand that culture? Do you feel you can quickly build trust and rapport between yourself and the existing co-owners?
How will ownership change your peer relationships?
Do you understand how ‘ownership’ will change your relationship with your peer group in the practice. Like it or not, if you become a co-owner you will be part of the leadership group that is making decisions on the performance of your former peers. Not everyone finds that adjustment straightforward.
How will you meaningfully contribute to the practice?
You are being offered the opportunity to become a co-owner because the current owners think you have ‘the right stuff’. But at a practical level what are you going to bring to the table that will make a difference? It is one thing to have a collection of great ideas about how to improve the practice. It’s quite another to have a pragmatic understanding of where and how you can add value.
Are you ready for the next stage in your professional development?
Becoming a co-owner in the practice isn’t an end in itself. It’s the beginning of the next stage in your career. For example, are you open to developing your skills in establishing new client relationships, finding new revenue streams, and leading others in the firm, as well as becoming familiar with a variety of employment law and financial management issues.
Use your seat at the table to shape the future
Taking the step to becoming a co-owner of a professional service practice is an exciting moment in your career. You have an opportunity to shape the future of a business to which you’ve already committed a considerable portion of your professional life. Capitalizing on that opportunity requires you undertake some serious due diligence; not just on the commercial and legal aspects of ownership but also on whether this is the right step for you at a personal level. If you bring innovation, drive and determination to the table, then you are over half way there.
If you are about to become a co-owner and want to talk about what might lie ahead, please drop me an email.
