COLORADO

Executive Summary

The owner of a growing accounting business founded in 1987 and located in Colorado is exploring the transition of her firm to a new owner(s). She will retire and focus on personal projects.

This one-partner firm will be transitioned sometime in 2022/23 and it is expected that the owner and 11 team members will remain with the firm to ensure a successful transition.

The business will achieve revenues of $1.910 million in 2022 (projected based on 6 months of data), an 11% increase over the 2021 figure of $1.721 million. The revenue breakdown is:

• 45% from recurring compliance services to 315 clients;
• 46% derived from tax services (1,617 returns completed as of June 2022, 1076 returns on extension and 165 returns in progress) and
• 9% from ad hoc advisory services.

In 2021, the 8 fee earners averaged $215,195 of revenue produced.

Good systems and processes in client management, business development, and operations mean the business is not dependent on any one individual.

About the Clients

• Industries served: Personal Services, Construction, Real Estate, Professional Services, S Corporations, Partnerships, C Corporations, Non-Profit Corporations, Individuals, Estates & Trusts.
• Revenue from business clients is 60.29% of total revenue. Individuals and others represent 39.71% of total revenue.
• Most client relationships are entirely managed by the team (versus the owner who manages a few client relationships).
• No single client represents more than 2% of total revenue

Office/Facilities

• The business occupies an office of 3,100 sq. ft. (the entire upstairs of the building)
• Monthly rent is $3,764
• Lease term expires December 31, 2022, with an option to renew. There is an option to purchase the building and there is a 5-year lease in place on the downstairs

Tax Software

Drake

About the Owner and Transition Plans

• Owner Age: 58
• Ownership percentage: 100%
• Short term plans: develop and implement exit strategy while continuing to operate and grow the firm
• Post-transaction plans: continue with the business to ensure a successful transition and then pursue other projects

Financial Overview

Revenue: $1,531,813 (2020) / $1,721,561 (2021) / $1,381,926 - (YTD 2022) / $1,910,000 – Projection (2022)
Cost of Sales: $361,866 (2020) / $444,868 (2021) / $361,773 (YTD 2022)
Operating Expenses: $401,690 (2020) / $451,267 (2021) / $164,412 (YTD 2022)
Net Profit $768,257 (2020) / $825,426 (2021) / $855,741 (YTD 2022)
Profit % (before Partner Expenses) 50.15% (2020) / 47.95% (2021) / 61.92% (YTD 2022)