Once or twice a year, I speak with a CPA or accounting practice principal who wants to sell a portion of their practice but not all. Sometimes, a principal is going into semi-retirement and wants to transfer most of the practice but not all. Sometimes individuals want to rid themselves of a certain type of return and sometimes, principals are concerned with client concentration. If there are too many client concentration issues, the exiting principal can hold on to a client instead of selling it now only to work it over to the other firm while the practice is in transition. While there are many good reasons for this to get structured as a partial buyout, there are a number of different considerations that a seller and a buyer must make when doing a partial sale. 
1) The seller should take the time to clearly identify the nature of the work being retained and the nature of the work being sold. This analysis should consider hours worked and fees generated from both sets of clients. With this analysis, a buyer and any lenders involved will be able to figure out the new cash flow and the margin on both the clients being sold and the clients being retained. Make sure to do your due diligence on this. You would hate to be sold the most unprofitable, troublesome accounts while the seller retains the good ones.
2) The non-compete should be modified to a non-solicit. It is more important to ensure that the seller will not be taking on clients that have been sold. In my experience the cleaner and longer the non-solicit the better. Getting a seller to agree to never work with any of the clients being sold is usually something that a seller will agree too. A full non-compete would not be possible in this case because the intent is for the selling principal to stay in business.
3) Financing concerns must be addressed up front. SBA will not allow a partial buyout so if the selling principal is staying in the industry and retaining any accounts it will be important to shop the partial buyout to several banks (non-SBA) prior to getting too far down the path.
While I believe that there is a time and a place for partial sales to take place, it is almost always better to try to find a structure that has the principal exiting completely or staying on only with the acquiring firm. There are simply too many variables that can come into play and too many places that the deal can go wrong. We have blogged before on employment agreements. Employment agreements or contractor agreements are a common way to move through these partial sale scenarios.
If you are thinking of selling part of your practice or you are considering buying a partial practice please take the time to speak with a business intermediary that has seen the other side of these transactions. Berkshire business sales and acquisitions have seen a number of these deals and have the expertise to guide you through either the buy or sell side of the transaction. (Berkshire Business Sales & Acquisitions (602) 614-3583)
