Fee Block Finance
Finance to acquire a fee block
without draining your working capital.
For many practices, buying a block of recurring fees is the fastest and most predictable way to grow. The question is how to pay for it without leaving the firm short for payroll, tax and the January peak.
The pressure
Growth you can buy. Cash you still need.
Organic growth in a professional practice is slow. A fee block arrives with clients, recurring income and often staff who know the work. That is why so many firms grow by acquisition.
But fee blocks are usually priced as a multiple of recurring fees, and the vendor typically wants a meaningful share on completion. Paying from reserves can leave the practice exposed at exactly the wrong time: just before a busy season, or while the new clients are still being integrated.
Finance lets the acquired income help pay for itself.
What can be financed
The specific uses.
- 01 Whole fee-block acquisitions Buying a defined book of clients and the recurring fees attached to them.
- 02 Deferred consideration Funding the later instalments due to a vendor, or replacing a deferred structure with a single completion payment where that improves the deal.
- 03 Vendor-funded structures Where the seller is willing to leave part of the price in the business, finance can cover the balance so the deal still completes on time.
- 04 Goodwill acquisition Funding the goodwill element of a practice purchase, where there may be few tangible assets to lend against.
- 05 Partner succession A retiring partner’s client base passing to a remaining partner or incoming buyer.
- 06 Top-up funding Additional capital after completion for integration, systems, recruitment or a second acquisition.
- 07 Refinancing existing acquisition debt Restructuring borrowing taken on for earlier acquisitions, often to consolidate or release capacity for the next one.
How it’s often structured
Structured around the income you’re buying.
Every acquisition is different, but most fee-block funding involves some combination of:
- A term loan repaid over a period that the acquired fees can reasonably support.
- Vendor deferred consideration with part of the price paid over time and sometimes linked to client retention.
- Clawback or retention adjustments where the price flexes if clients don’t transfer.
- The buyer’s own contribution which lenders will usually want to see.
The right mix depends on the size of the block, how the fees are recurring, the retention terms and the strength of the acquiring practice. Part of our role is working out which structure a lender is likely to support before you commit to heads of terms.
How we help
Not one lender. The right one for the deal.
Fee-block acquisitions are funded by high-street banks, specialist professions lenders, challenger banks and alternative funders, and each looks at recurring fees, retention terms and the buyer’s contribution differently.
We aren’t tied to any of them, and we have access to 300+ lenders across the market. We assess the acquisition, work out how it should be structured and presented, search the market for lenders with an appetite for this kind of deal, and manage the process through to completion.
What lenders will want to see
What lenders will look at.
- The acquiring practice’s accounts and current borrowing
- The fee block: recurring fee income, client numbers and concentration, service mix
- The agreed price, how it was calculated, and any deferred or retention terms
- How the clients will be transferred and serviced
- The buyer’s own contribution
- For larger deals, a short forecast showing the combined practice
We help you pull this together and present it in the way lenders expect, so the first conversation with a lender is a serious one.
Who this is for
- AccountantsThe most common fee-block buyers. Also see the January cash-flow and succession sections of the accountants page.
- Financial advisers and insurance brokersRecurring-income book purchases.
- SolicitorsAcquiring a retiring practitioner’s practice or a practice area.
- Other professional firmsBuying recurring client relationships.
Questions
What firms usually ask.
Can a fee-block purchase be 100% financed?
Lenders usually expect some contribution from the buyer or the vendor. Where deferred consideration or vendor finance is part of the deal, the amount you need on day one can be much lower than the headline price.
Does the fee block itself count as security?
A fee block is income rather than a physical asset. Some lenders will lend against the combined practice’s cash flow, sometimes with personal guarantees. We’ll explain what’s likely to be asked before you apply.
Can finance cover deferred consideration I’ve already agreed?
Often, yes. Refinancing future instalments into a single facility is one of the options we can search the market for.
How early should we talk to you?
Before heads of terms if you can. The funding structure can affect what you offer the vendor.
How does the vendor’s tax position affect a fee block deal?
How and when the price is paid can matter to a retiring accountant, and many take advice on Business Asset Disposal Relief before agreeing terms. That can shape how much is paid at completion and how much is deferred, which in turn affects the funding you need.
Success stories
Fee Block Purchases in practice.
£100,000 to complete deferred consideration.
Read the story → £300k Representative funding scenarioFee block acquisition AccountantsFunding the acquisition of a recurring fee block.
An established accountancy firm wants to acquire a portfolio of recurring clients from a retiring practitioner. The structure may need to take account of the factors below.
- Recurring fee income
- Client retention
- Deferred consideration
- Transition arrangements
- Working capital after completion
Let's talk
Buying a fee block?
Talk it through before you agree terms.
Before you approach a lender, speak to someone who understands the transaction. Confidential, no-obligation initial discussion.