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Articles related to the buying and selling of accounting practices. Get information on the major factors that sellers and potential purchasers of accounting practices face in completing what for many is a once in a lifetime transaction.

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Brannon Poe is the founder of Poe Group Advisors and has been successfully transitioning accounting practices since 2003. He is an E&amp;Y alumnus and is a prominent author in the accounting practice field. His most recent work includes the ‘Accountant’s Flight Plan – Best Practices for Today’s Firms’ and ‘On Your Own: How to Start Your Own CPA Firm’, both of which are published by the AICPA.His latest creation, the <a href="http://accountingpracticeacademy.com" target="_blank" rel="nofollow">Accounting Practice Academy</a>TM, is a virtual workshop aimed at assisting practice owners transform their accounting practices business strategically, profitably and quickly. A key aspect of the Academy lies within its community environment, an environment that aims to keep owners motivated, accountable, and driven to take action on their key objectives. facing their business.We were keen to learn more about the Accounting Practice AcademyTM and reached out to Brannon Poe to learn more about this innovative and exciting program.Q. Who is the Accounting Practice AcademyTM aimed at? Our ideal client is an ambitious practice owner with annual revenues of less than $3M. It might be a fairly sophisticated practice owner who wants to fine tune or it might be an ambitious owner is who is just getting started. The average revenue of our past sign-ups have been around $900,000 per year.Q. Why should practice owners take part? Most accountants work very hard. Many work too hard. If there's one thing we've learned through our M&amp;A work is that no one wants to own a practice long-term that consistently requires heavy hours and provides less than exciting profits. This is a curated, results oriented workshop based on our 1 on 1 coaching model where we’ve helped successful accounting firm owners take their firms to the next level AND work less. Our preview video can be watched here:<div class="walkthrough container-1200"><div class="embed-responsive embed-responsive-16by9"><iframe src="https://www.youtube-nocookie.com/embed/WVzLlQ0nw_0?controls=0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" width="560px" height="315px" frameborder="0"></iframe></div></div>Q. How is the workshop delivered and what time investment is required? Our weekly lessons take about 30 minutes each (give or take). They are delivered online and the content is highly curated. We get right to the point. The lessons can be completed when convenient, but they are only released one at a time so people cannot work ahead. This keeps everyone focused and engaged. (The content is available beyond the workshop period.) There are tools with each lesson that take approximately 30 minutes to complete. The zoom calls with your peers are scheduled for 1 hour...although they could run over or run less. Some lessons will take longer than others but this is the average. The time invested therefore should be about 2 to 3 hours per week.Q. What can practice owners expect at the end of workshops? A full roadmap for a total transformation of their firms. Owners will come away with confidence and clarity to take action. Most will have multiple game-changing ideas to implement. Our goal is for people to come away highly focused and aware of their top priorities. If you are looking for a way to make some big strategic moves, this is it. Q. It can be a lonely and challenging place running your own business. The community aspect appears to be a key component of the Academy. Can you tell us a little more about this and why this is such an important part of the program? I’ve personally been in a coaching program called Strategic Coach for over 10 years. I’m also in an EO forum (Entrepreneur’s Organization) where I take part in a monthly mastermind. Tapping into the community’s knowledge in a safe environment where you can be candid and open with other owner’s has an incredibly powerful impact on all involved. A group of 5 or 6 accounting firm owners has a wealth of knowledge and experience. Most owners are great at quickly seeing other people’s issues and opportunities, but it’s hard to do that for yourself because it’s too close.Q. When does it start and what investment is required? Currently, the investment is $ 4,000. Our first workshop starts on May the 4th, 2020. The May workshop is an abbreviated version because we wanted to give people an earlier opportunity due to the COVID 19 challenge that firms and their clients are facing. The 5 week May workshop investment is offered for $ 2,500. The next workshop starts in July, 2020 and is an 8 week course. The full course has additional modules that cover: 1. Goal setting. 2. The importance of time off. and 3. Marketing.If you are interested in learning more about the Accounting Practice AcademyTM visit&nbsp;<a href="http://www.accountingpracticeacademy.com" target="_blank" rel="nofollow">www.accountingpracticeacademy.com</a>

The Accounting Practice Academy is a virtual workshop aimed at assisting practice owners transform their accounting practices business strategically, profitably and quickly.  Learn more about the team behind this new concept.


The  Accounting Practice Academy with Brannon Poe

Accounting Practice Academy

As a business broker that specializes in the sale of accounting firms I get questions everyday about using a commercial loan to acquire an accounting firm. How much of a down payment is required? Should I get an SBA loan or a conventional loan? How long is the process? What are the terms? What will the bank want as collateral for the loan? Are there really banks that are willing to loan money for the purchase of an accounting firm? These are all good questions. I have been putting this type of financing together for almost 15 years. During that time I have worked with many lenders all over the country. The first thing I will warn you is that not all lenders will do this type of financing. In fact, working with a lender that is not currently approving and closing these specific types of loans is a recipe for disaster if you have a deal in hand and need financing to close. The bad news is that almost every loan officer you talk to at every local bank will tell you “No problem, we can do that”. But they can’t. This may take a week to figure out or several months. Once you have your third call or email into the loan officer and they are no longer returning calls you can pretty much come to the conclusion they had problems “selling” your loan request to their credit committee. These loans are always lacking in hard collateral and that causes heartburn to lenders that are not already doing this type of lending. The good news is there are lenders that will do this type of lending with both SBA and conventional loans. You must qualify the lender on the front end and make sure this is not their first practice acquisition loan for the purchase of an accounting firm. I am asked all the time by buyers to pre-qualify them for a loan. While this is easily done when determining how much of a home mortgage you can handle, it’s really not possible for this type of financing. Here’s why. Lenders look at all aspects of the loan request when rendering a decision. They will look at the buyer’s experience, personal net worth and liquidity, personal credit history and personal living expenses. At the same time they will perform a historical cash flow analysis on the seller’s practice to determine if there is enough cash flow to service the bank debt, allow the buyer to take out a salary that meets their needs, and make sure there is a cash cushion leftover. Any one of these areas that does not meet the banks underwriting requirements can render a negative decision on the loan request. I’ve had many buyers over the years get turned down on one or more loan requests and yet approved for another. There is, without a doubt, subjectivity that plays into a bank’s analysis of these loan requests. Certain types of loans work better for different situations. In some cases an SBA loan may be the best approach for a particular situation. In other situations a conventional loan may be the better way to go. The only way to approach the process of putting financing together for the purchase of an accounting firm, in my opinion, is to look at the entire picture and use past and current experiences to determine which type of loan and lender it makes sense to approach first. One example is a buyer who has never owned a business. Without knowing anything else, this would typically be an SBA loan. SBA lender requirements on experience are not usually as demanding as that of conventional lenders. Another example is the size of the loan request. Loan amounts under $250K can be tougher to get done with an SBA lender. Many of these lenders have minimum loan amounts they wish to deal with. A CPA looking for a $100K will usually be better served looking at conventional options first. Today there are more conventional lender options for CPA’s than Enrolled Agents (EA’s) but specific licensing is not as big an issue with SBA lenders. As of January 2013, here is an overview of the types of lending available to accountants. Remember, this has changed a lot over the past 15 years. When I first started putting this type of financing together in 1999 there was almost no conventional lending for these deals. By early 2007 we could put some type of financing together for just about any situation. Lending on these transactions did not completely go away in 2008-2009, as it seemed to for main street businesses, but it was very tough to get loans these two years. Overall lending to this industry has rebounded very well in the past few years but I don’t realistically expect to ever go back to what we had pre-2008. We currently are having success putting together both SBA and conventional loans with multiple lenders in each category. Lenders like to see borrowers with some decent liquidity. At a bare minimum the borrower should have 10-15% of the purchase price in personal/business cash. Lenders won’t always require large down payments but they all seem to like to see a borrower’s ability to put this type of cash into a deal. SBA loans have specific requirements for the amount of “equity” required to be put into a deal. The SBA lenders’ definition of equity is the combination of buyer down payment and seller note. This varies depending on the loan amount. Conventional lenders will also usually require a borrower to put 10% of the purchase price into a deal but are typically a little more flexible on seller note requirements. When there is no real estate involved most lenders, both SBA and conventional, will provide up to a 10-year term. Depending on the loan amount some lenders will go as long as 15 years. Whether it’s an SBA or conventional loan all lenders will require a personal guarantee from the buyer/borrower and a 1st position blanket lien on the accounting practice and all practice assets. It’s more likely you will have to pledge your home as additional collateral for an SBA loan versus a conventional loan but nothing seems to be 100% in lending. There are plenty of SBA loans done for these types of deals where the borrower does not have to pledge their home as collateral. From start to finish these loans typically take 30-90 days to complete. Buyer, seller and broker can have a big impact on how long it actually takes to close a loan. It’s important to have someone drive the process to get it done on time. Obviously there is a lot not being covered in this short article. At the same time every deal has its’ own unique circumstances that create a list of questions specific to that deal. My advice is to go beyond simply asking if a bank is interested in putting this type of loan together for you. Instead ask them some tough questions on the front end to interview them and make sure they are currently doing this type of financing before you waste a lot of time and end up killing your deal. One thing I have learned over the past 14+ years is that TIME KILLS DEALS. You typically only have one chance to get it done right so it is important to pick the right lender for your situation.&nbsp; 
This artcle has been written by: Chuck Hayes, ABA Advisors LLC. &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; <img src="/static/images/articles/1358346238.jpg" class="img-fluid">Chuck Hayes is the President of ABA Advisors, LLC, a nationwide consulting and brokerage firm specializing in working with accountants. Since 1999, Chuck has helped hundreds of CPAs, EAs and other accounting and tax professionals with the sale, acquisition, merger or financing of their firms. ABA Advisors is located in Indianapolis, Indiana. He currently represents practice owners, buyers and those seeking financing all over the United States. He can be reached at 317-546-7720 or email at ch@acctsales.com. Our website is <a href="http://www.acctsales.com" rel="nofollow" target="_blank">www.acctsales.com.</a>

Article on financing the acquisition of an accounting firm by Chuck Hayes, President ABA Advisors, LLC.

Financing the Acquisition of an Accounting Firm

Brokers &amp; FSBO sellers - 5 reasons you should seriously consider advertising the sale of your practice on this site:1. Coverage:Our site recieves thousands of visits from CPA's and tax professionals looking for purchase or merger opportunities across the United States.&nbsp; In the first 2 years of our launch back in 2012, we had over 31,000 visits from 20,000 unique visitors!&nbsp; Since then the site has gone on from strength to strength and we are getting close to approximately 30,000 visitors annually. Our platform has helped a number of 'For Sale By Owner' practices generate leads that have resulted in the sale of their business.&nbsp; 

 
2. Confidentiality:You can maintain confidentiality by using a free <a href="http://mail.google.com" target="_blank">Gmail account</a> to create your advertisement.&nbsp; Responses from potential purchasers would then be sent to this account to help you maintain your anonymity.
3. It's inexpensive:It costs as little as $199 to place an advertisement on the site for 1 month, and $300 for 6 months, with discounted rates available to brokers that place multiple listings (contact us for details). The equivalent advertisement buried deep in the inner pages of your local State CPA Society website is likely to cost you in the region of $80 to $100 a month.&nbsp; What more is there to say!
4. Email Alerts &amp; Social Networking Coverage:At last count we had over 2,000 potential buyers that had signed up for our email alert service.&nbsp; When a new advertisement is added to the website we alert these buyers by sending them a quick email advising them to visit our website as a new opportunity has been added.&nbsp; In addition to this at last count we also had over 900 Twitter followers, many of whom are CPA's and accounting professionals interested in the latest acquisition or merger opportunites.&nbsp; We tweet to these followers when new listings are added to the site. We are also active on our popular Facebook page.
5. It's Simple:Creating an advertisement on the site is simple, and can be done in a couple of minutes.&nbsp; Below you will find a 2 minute video walkthrough which shows you how easy it is to create an advertisement on our site.&nbsp; It really is that easy!<a href="https://accountingpracticeexchange.com/Login"></a>Below is a 2 minute video walkthough showing you how to create an advertisement on this site:
<iframe class="img-fluid" name="wistia_embed" src="//fast.wistia.net/embed/iframe/87kiw8l7gz" scrolling="no" width="770" height="433" frameborder="0"></iframe>

A video walkthrough showing the steps required to place an advertisement on the Accounting Practice Exchange website.

Sellers - A Video Walkthrough 

Brokers & FSBO's - 5 Reasons to advertise here

Pre-sale grooming is the process of identifying weak areas of your practice and proactively resolving these issues in order to attain a higher value for your business when it is sold.
 Many practice owners believe that once they reach the decision to sell their practice that the next immediate step is to market the firm via either a broker or through the For Sale By Owner (FSBO) route.&nbsp; However, what they fail to realise is that they are missing a vital step in the sales process, one that if correctly implemented will not only improve the price they finally attain for the practice, but that will also lead to a smoother sales process with fewer complications, time delays and nasty surprises.&nbsp;
This process is known by those in the M&amp;A market as pre-sale grooming. Is pre-sale grooming a pre-requisite for a successful sale? Much of course will depend on the motivation and ambitions of the practice owner and the timescales they are working towards, as well as the strength and marketability of their practice. Sellers that are looking for a quick exit will have little time to fully undertake a thorough appraisal of their practice and to implement improvements to rectify weaknesses that they have identified.&nbsp; In an 'ideal world', once the process of pre-sale grooming has been undertaken the practice should continue for a full year in order to get a full years set of financials.&nbsp; You could therefore be looking at a period of 18 months from the moment the decision has been made to sell to the point where you actively market the sale of the practice (6 months to appraise and implement improvements and 12 months to obtain the impact of these changes on a full financial year). It's worth clarifying then that pre-sale grooming is not a pre-requisite for a successful sale. In fact, rightly or wrongly, many practices are sold each year with little to no grooming.&nbsp;&nbsp; The motivation of the practice owner and what they are attempting to achieve out of the sale plays a pivotal&nbsp; role in determining the extent (if any) of pre-sale grooming that is undertaken.&nbsp; For one reason another, price may not be the overriding factor behind the sale, or they may simply not have the time or desire to drive through change and improvements in their business.&nbsp; Other's too may lack the necessary commercial business skills, or may be so entrenched in their working methods that they find it difficult to 'see the wood from the trees'. I have yet to see the 'perfect practice', and I doubt very much if your practice is perfect.&nbsp; By undertaking pre-sale preparation sellers are not only in a position to fix inherent weaknesses in their business, but may also unlock hidden value in their practice during this process.&nbsp; Naturally practice owners need to be aware that it is not an 'all or nothing' process.&nbsp; If time is a limiting factor consider identifying 'quick wins'.&nbsp; Also bear in mind that a trade off exists between fixing a weakness and the corresponding value that this adds to the business. What are the key areas to consider when undertaking pre-sale grooming? Practice owners should consider reviewing the following areas of their business: 1. Financial 2. Legal 3. Infrastructure 4. Client Base 5. Marketing 6. Strategic Business Plan 1. Financial a. Clean finances Buyers will want to ascertain the real profitability of the practice and&nbsp; sellers should ensure that they remove all non-recurring and non-business expenses from the practice.&nbsp; Buyers like clean and transparent accounts from which to base their valuations, so ensure that you provide them with this by identifying and removing personal assets and expenditure.&nbsp;&nbsp; Identify and eliminate unnecessary perks from the practice. These actions will also have the dual effect of improving profitability. b. Taxes Ensure that your practice's tax affairs are up to date. c. Outstanding loans and debt Focus on attempting to reduce liabilities in the balance sheet by paying off outstanding loans and other debt. d. Working capital Improve the cash position of the business by proactively focussing on the working capital process.&nbsp; Buyers like to see cash in the business and will be comforted by a tight and well managed working capital cycle.&nbsp; Set up processes to provide them with this.&nbsp; Identify slow payers and reduce debtor days.&nbsp; Pay creditors on the agreed terms and not before.&nbsp; This is 'bread and butter' financial management yet I'm still amazed how many practices fail to follow the advice that they preach to their clients. e. Revenue and profit Timing is everything when it comes to accounting and tax practice sales.&nbsp; I'm often asked by practitioners when the best time to sell is.&nbsp; The answer is twofold.: (i) Sell when you don't need to, and (ii) Sell after a period of rising revenue and profits. Selling a practice can not only be a complex process but is also one where emotions, pressure and strain can run high.&nbsp; Your negotiating position will be enhanced, and you will attain the maximum value for your business when you are not under pressure to sell. Nothing puts buyers off more than a practice with declining revenue and profits.&nbsp; Often there are justifiable and explainable reasons for the decline.&nbsp; However, the fact remains that it raises a number of negative questions.&nbsp;&nbsp; Buyers become focussed on identifying what's wrong with either the practice or the market that it is operating in.&nbsp; There will always be buyers looking to turn around failing or declining practices, but the perceived risk associated with a purchase of this kind will be reflected in the transaction price. Provide buyers with what they are looking for.&nbsp; Sell at a time of rising revenue, but also ensure costs are controlled and profit margins are improving year on year. 2. Legal a. Legal disputes Ensure that any legal disputes that the practice has are settled.&nbsp; They create uncertainty in the sale and they will always be identified by buyers during whilst undertaking due diligence. b. Asset ownership Ensure the ownership of assets is clear and that the necessary supporting documents are in place as they will be required during the sales process.&nbsp;&nbsp; c. Licenses Ensure that all licenses required by your practice are current and up to date. d. Property and leases Ensure buyers focus on the positives of your business.&nbsp; Ensure that no unfair equipment leases exist and that all landlord property lease issues have been resolved. If you own the freehold on your premises, start the decision making process of identifying whether this is or isn't going to form part of the sale.&nbsp; Seek valuations from suitably qualified professionals. If your premises are privately owned by the practitioner and are leased back to the practice then ensure that any agreement is at market rate and that there are no onerous lease terms that could hamper the sale of the business. e. Employment contracts Buyers will want to see employment contracts and terms at some stage during the sales process.&nbsp; Seek professional employment advice from a qualified specialist lawyer to review existing contracts and to ensure that any new contracts or changes to existing terms are implemented in a legal manner.&nbsp; The emphasis here should be on ensuring employment contracts aid and not hamper a future change in ownership of the business. Address the issue of non-compete agreements for your fee earners.&nbsp; Do not underestimate this issue.&nbsp; The major risk that a buyer faces when purchasing a practice is the real, or perceived threat of a major fee earner within the practice leaving, taking a large number of clients with them, and setting 'up shop' down the road.&nbsp; Buyers like to see non-compete agreements in place, preferably with a geographic exclusion zone.&nbsp; This is a sensitive area, and will naturally arouse suspicion amongst your staff.&nbsp; Nevertheless, consider starting the process of getting legally binding non-compete agreements in place, and ensure that the communication of this within the practice is managed in a planned and positive manner. 3. Infrastructure: a. Streamline operations Undertake an appraisal of your business processes indentifying areas that can be streamlined and improved.&nbsp;&nbsp; For example; - Does your practice have an organisation structure and does this structure reflect the nature of the services you provide? - Are processes in place to communicate and pro-actively manage clients in order to ensure bottlenecks at tax or accounting year ends are minimised?&nbsp; - Are processes in place to identify 'client churn'?&nbsp; Are questionnaires (written, email or verbal) sent to clients in order to understand the reasons they no longer need the services of the practice?&nbsp; - Are processes in place to ensure that responses to these questionnaires are actually acted upon and are fed back into the practice? - Do you have a process map that shows the life cycle of a client through your practice, highlighting not only possible exit points but also opportunities and routes to cross sell other professional services to them? - Does the practice know what it's Key Performance Indicators (KPI's) are?&nbsp; Are these being recorded and reported?&nbsp; These will form a key part of the Sales Memorandum and could include: number of new clients, client attrition rate, average fee per client, clients by revenue/hours billed, client sector, revenue by work category.&nbsp; If you don't currently have KPI's, start the process of identifying relevant KPI's for your practice. b. Systems What do the systems and software you use say about the professionalism of your practice?&nbsp; - Is the software you use in your practice properly licensed? - Are you using the outdated software that is no longer supported?&nbsp;&nbsp; Systems and software can be an expensive area, and whilst I wouldn't suggest spending vast sums to purchase the latest 'must have' practice software, do consider how you can improve current systems and versions to ensure that they are viewed at the very least neutrally, rather than a negatively by potential purchasers. c:&nbsp; HR Management and succession panning - Are systems in place to recruit, train, retain and develop staff? - Do you have a structured succession plan in place in order to ensure senior fee earners are replaced within the business?&nbsp; This not only reflects the professionalism of your practice, but also offers some security to potential purchasers concerned with staff turnover post completion and the possible effect that this could have on&nbsp; client retention. 4. Client Base: The quality of the client base will have a direct impact on the price that is attained for the practice.&nbsp; Dedicating time pre-sale to identify weaknesses in your client base will therefore be time well spent.&nbsp; Buyers will naturally focus a considerable amount of their energy into assessing the client base they are acquiring with the practice.&nbsp; Issues to focus on include: - Is your practice reliant on a small number of large clients? This poses a considerable risk to the potential buyer, and every effort should be made to reduce these dependencies by diversifying the client base.&nbsp; - Have your practices professional fees remained unchanged for a number of years? Often this scenario will be accompanied by a declining gross margin as costs rise.&nbsp; Take the time to review the practice's fee structure and ascertain where this fits within the market place.&nbsp; Revenue and profit are key factors in determining the market value of a practice, so consider raising fees where they fall below market rate. - Does your practice cross sell other services to your clients? Focus on identifying cross selling opportunities to existing clients.&nbsp; Be proactive in this regard, and ensure fee earnings are in frequent contact with their client base at regular periods throughout the year and not just at year end. &nbsp; 5. Marketing: Spend time to improve the presentation, professionalism and profile of the business.&nbsp; Press releases are a proven method of raising the profile of the business, particularly in the accounting and tax trade press. Consider&nbsp; investing in your branding and corporate image if it is perceived as outdated by either clients or employees.&nbsp; Also realise the importance that the web plays in today's accounting market, both in the acquisition of new leads through search engine queries as well as what your website says about your business.&nbsp; The days of an amateur looking site are well and truly over, and in today's' tech driven world leave your business looking like a dinosaur.&nbsp;&nbsp; Replacing such a site with a simple, yet professional looking one can easily be achieved at a reasonable cost. 6. Strategic Business Plan Start the planning process for your business and what you expect to achieve in the pre-sale period.&nbsp; This plan will include action points and targets from items we have discussed in points 1 through to 5. Determine where your business&nbsp; fits within the current marketplace and put in place a strategic plan to highlight where you want your practice to be and how it is to get there.&nbsp; Ensure that financial forecasts are in place for the next 2 years, and that plans are in place to review monthly performance to forecast so that issues and opportunities can be easily identified and addressed.
Author: 
Daniel Crowley, CGMA Founder - Accounting Practice Exchange

Pre-sale grooming is the process of identifying  weak areas of your accounting, CPA or Tax practice and proactively resolving these issues in order to attain a higher value for your business when it is sold.

Preparing your practice for sale

A good business broker is worth their weight in gold by ensuring that the seller attains the maximum value for their business on acceptable terms.&nbsp; A bad or poorly performing broker can be disruptive to the sales process, leaving the seller frustrated and questioning exactly what value the broker is bringing to the table aside from a hefty bill. The decision as to whether to use a broker or to pursue the For Sale By Owner (FSBO) route is one that a practice owner will have to make relatively early in the sales process.&nbsp; For those sellers that wish to use a broker it is imperative that they appoint a firm that is experienced, has a track record of performance and understands the local accounting and tax market.&nbsp; In short they need to add real value to the sales process. It is therefore critical that the seller undertakes a proper thorough appraisal before appointing a broker.&nbsp; Below we have outlined some key questions that practice owners should consider asking brokers in order to sort the 'wheat from the chaff'.&nbsp; Don't be concerned about being too specific when asking questions.&nbsp; Remember that this is effectively a supplier selection process and any legitimate, qualified and successful broker will welcome detailed questions about their ability, experience and track record in brokering practice sales. 1. Experience a. How long have you been a broker? b. Are you a specialist (accounting and tax broker) or do you sell a diverse range of businesses? c. What certifications and qualifications do you have? d. Are you an independent broker or do you form part of a larger group? e. What geographical area do you cover? The key here is for sellers to determine the experience and qualifications of brokers and to ensure they have a complete picture of the background of the broker that will be handling the sale of their practice. Ask the broker what licenses and certifications they and their firm’s have.&nbsp; There are an array of qualifications and certifications out there varying from real estate licenses to valuation (CVA Certified Valuation Analyst) and brokering specific (CBI Certified Business Intermediary).&nbsp; Also ask them to clarify if they are required to hold a license to broker the sale of businesses in the State that your practice is located. Ensure that you understand which broker will be handling the day to day sale of your practice.&nbsp; Be aware of situations where the principle broker (the 'rain maker') initiates the sales process before handling day to day detail to another broker within the firm.&nbsp; In these circumstances ensure you determine the experience and qualifications of the other broker that you will be dealing with on a day to day basis. 2. Sales Record a. How many accounting/tax practices do you list per year? b. How many of these practices are sold? c. What is the average percentage sales price to asking price for these practices? There is nothing like a proven track record to inspire confidence, and the number of practices that the broker sells per annum should give a good indication of the volume of business that the broker is handling.&nbsp; Be wary of a broker that sells too much (danger of not receiving a personalised service), or a broker that sells too little (they have little to no experience in this sector).&nbsp; The average actual sales price to asking price should help identify broker's that deliberately inflate sales prices in an attempt to win business.&nbsp; The sales to listings ratio should give an indication as to the ability of the broker to 'close a deal'.&nbsp;&nbsp; It may also highlight how selective the broker is in taking on clients.&nbsp; Brokers that are happy to take every sales opportunity that comes across their desk will have a low sales to listings ratio when compared to a broker that is more selective.&nbsp; Selective broker are more likely to invest time and resources into the transaction. 3. Marketing, price and terms a. How and where will you market the practice? b. What price will you market the practice and how will you derive that price? c. How many registered buyers do you have in your buyer pool? d. What terms of sale can I realistically expect to achieve? Brokers will play a pivotal role in marketing your practice and it is important to understand what plans they have and what resources they will dedicate to it.&nbsp; Look for brokers that have a number of marketing weapons at their disposal and who understand how to tailor their efforts to find the right buyer for your practice.&nbsp; Take a quick look at the broker’s website and their online presence (Twitter, Linkedin, Facebook).&nbsp; This should give a good indication as to the professionalism of the firm and whether they utilise modern techniques to engage with the new generation of technology savvy accountants and tax professionals. Also ask to see if it is possible to get examples of sales memorandums and marketing literature that the broker has produced for previous clients to get a feel for how much effort the broker puts into producing what will be one of the key documents in the sales process. Detailed questions about valuation and price should provide an indication as to the broker's understanding of the local market as well as their experience and understanding of business valuation methods.&nbsp; Be wary of broker's that focus only on 'perceived' industry standard valuation methods relating to 1x gross referral income.&nbsp; These methods should be a guide at the best of times and an experienced broker will need to see a full set of financials and recast the number's to highlight the seller's discretionary earnings in order to ascertain the full earning power of the practice. Most brokers will have a database of interested buyers.&nbsp; However, the key thing to determine here is how many will actually be interested in your practice.&nbsp; Ask specifically how many buyers on their database are 'active' and that have registered an interest in firms of your size in your geographical area.&nbsp; I would even go further and define active into 3 distinct categories (i) Broker contact with the potential buyer in the last 3 months, (ii) between 3 to 9 months and (iii) and over 9 months. Brokers who are experienced in the local accounting and tax market place should be able to discuss some of the likely terms you will achieve with the sale of your practice, for example 'all cash at close' or alternatively some form of 'earn out' agreement.&nbsp; As a seller you should be looking for transparency, integrity and honesty from your broker and this question enables them the opportunity to express their views and opinion.&nbsp; Be wary of brokers that over sell your position.&nbsp; A good broker should manage a seller’s expectations and keep them realistic from the outset. 4. Fees a. What are the broker fees and how are they structured? b. Are there any upfront fees? c. Do you require exclusivity and for how long? d. What happens if I change my mind and withdraw from the sale? e. What happens if I withdraw from the sale and sell to a business you introduced to me at a later date? f. What am I getting for this fee? Fees vary from broker to broker and are likely to fall somewhere between 10% and 15% of the final sales price.&nbsp; Much will depend on the marketability of the practice.&nbsp; A good practice in a sought after metropolitan area is likely to sell more easily than a similar practice in a less populated out of town location, and the fee structure is likely to reflect the additional marketing effort that will be required by broker. The important factor is not to get bogged down at this stage by looking purely at the percentage fee.&nbsp; It is equally important to understand the small print of the contractual agreement that you will be entering into with the broker, particularly any penalty clauses that could come into play should you withdraw the sale of the practice at a later date.&nbsp;&nbsp; These details should form part of your overall decision making process when comparing broker to broker and your appetite to business risk. Also bear in mind that it is always worth asking about any flexibility in rates or in terms.&nbsp; Leave it as an open question at this stage but don't hesitate to negotiate rates more actively prior to signing on the dotted line with a broker.&nbsp; 5. References a. Can you provide a list of references Brokers live and die by the strength of their referral network.&nbsp; A good broker should be willing and able to provide a number of referrals from a variety of resources.&nbsp; Try and get as broad a spectrum of referrals as possible from both buyers and sellers as well as&nbsp; lawyers, lenders and financial advisors that the broker has worked with in the past. Choosing a broker is akin to any supplier selection process, and practice owners looking to sell their business need to put in the necessary legwork and research in order to identify a broker that can assist them with the sales process.&nbsp; Understand that this will not be a one way street.&nbsp; Good brokers will undertake due diligence on you and your practice before agreeing to take you on board.&nbsp; If they don't be a little concerned!
Author:&nbsp; Daniel Crowley, CGMA Founder - Accounting Practice Exchange

Covers the main areas that accounting or tax practice owners should ask when selecting a broker to manage the sale of their business.

Selecting a broker

Key questions to ask in selecting a broker

Finding the right accounting practice to buy has a lot of great advantages…as long as you buy one that reasonably fits you.&nbsp; I say reasonably, because you will never find the “perfect” practice.&nbsp; After all, if you build a practice from scratch it will also have flaws.&nbsp; Without a doubt, acquiring a well-established practice can minimize the struggle to become a successful practitioner. It can expedite the process considerably because it immediately gives you a reliable revenue stream.
Below are 7 key areas to focus on when initially evaluating an accounting practice to buy:
 FOCUS ON CLIENTS: Who is your ideal client?&nbsp; Are you likely to be able to connect with these clients?&nbsp; Let’s assume for a moment that you have the technical competence to create value for these clients.&nbsp; Can you relate to them? Would they be enjoyable to work with?&nbsp; Look at their income, industries and ages.&nbsp; The first indication will be how well you relate to the seller.&nbsp; A good cultural fit with the seller is a very positive early sign. FOCUS ON TRUST: Do you trust the seller?&nbsp; This is really simple.&nbsp; No trust, no business.&nbsp; Take some time to develop rapport with the seller and take note of your first impressions. BACKGROUND OF SELLER: What is the professional background of the seller?&nbsp; Big firm, small firm, corporate?&nbsp; This will help you understand his/her skillset better.&nbsp; This background inevitably will show up in various ways throughout the practice.&nbsp; For example, a CPA with a heavy corporate background may do more strategic consulting with clients while a CPA with a big firm background may have very structured/organized files. MANAGEMENT STYLE/ABILITY: How many staff does the firm have?&nbsp; Have you managed people before?&nbsp; How does the seller manage his/her people?&nbsp; Would the style be described as structured or flexible?&nbsp; All owners manage people differently and perhaps your management style would be better, but it’s important to understand the relationships the seller has with staff.&nbsp; This can help you spot several things such as:&nbsp; competitive threats, hiring and firing needs, as well as strengths to build upon. TECHNICAL ABILITY: Know the key revenue streams of the practice.&nbsp; If there are smaller areas where you do not have mastery it may not be a problem, but if the practice focuses on areas that are problematic for you, then the practice may not be right for you. RISKS: Know the key risk areas when buying a practice.&nbsp; The most common risks we see are: Very large clients-If large clients represent a large percentage of firm revenues, then this can pose a risk that you will want to mitigate with the purchase structure. Competitive threats-With the seller and potentially with staff. Transition-poorly executed transitions are probably the biggest threat.&nbsp; Early communications with staff and clients are crucial.&nbsp; A proactive, confident approach fuels success.
POTENTIAL: Many buyers focus on all the risks of buying that they forget to consider and plan for the opportunities.&nbsp; Most of the potential for growth comes from your own abilities and talents.&nbsp; A lot of buyers we see have something retiring owners typically don’t have – ENERGY.&nbsp; The best thing you can do as a buyer is know your own strengths and weaknesses and put your energy in the right places.&nbsp; You need to find a practice that can capitalize on your own strengths.&nbsp; Significant growth can often be accomplished simply by creating more value for existing clients.&nbsp; Couple that with improvements in pricing strategies and efficiency, and the practice’s cash flow can be significantly and rapidly improved. I’ll close with a quote: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Warren Buffett
This article has been written by: Brannon Poe, CPA of Poe Group Advisors
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Read more from Brannon at the Poe Group Advisor's <a href="http://www.poegroupadvisors.com/find-right-accounting-practice-buy/" rel="nofollow" ,="" target="_blank">blog</a>.
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Finding the right accounting practice to buy has a lot of great advantages as long as you buy one that reasonably fits you.  Advice for buyers by Brannon Poe.

How to find the right accounting practice to buy.

A snap shot of the brokered accounting and tax practice market in the United States.  Includes details on the number of accounting practice brokers and their share of the market.

Accounting Practice Brokers

A snap shot of the brokered practice market

Many responses to your ad will be from buyers who are not right for you or your clients, and you (and the unsuitable buyers) could waste lots of time talking to too many, thereby delaying the sale and appearing uncommitted to serious contenders. The process of selecting the right buyers to talk to is called pre-qualification. A broker will normally do this for you if you are using a broker, but we offer some guidance below if you are selling the practice without a broker. Arguably you ought to have your pre-qualification plan ready before you advertise. Brokers report that around 90% of initial responses to your advertisement will be from unqualified buyers who are not in a position to purchase your practice. Why is this a problem? Don’t you want to see as many potential buyers as possible to get the best deal? Cost of your time. Well, you are running a practice, and your time is your most precious commodity. And how much of your time will be spent dealing with them? An hour perhaps? You know your hourly billing, you can do the math! Say you have ten unqualified buyers, and spend one hour on each at $100 per hour, that’s $1,000 of your time. And worse, you will be spending less on the buyers that really matter. Confidentiality. The more you deal with, the harder it will be to maintain confidentiality, and your sensitive business data will be seen by more people than you might feel comfortable with? So by not adequately screening unsuitable buyers out of the process, you risk divulging sensitive business information that may not only hamper the sales process but could have a detrimental effect on the future financial performance of the practice. In many cases, these buyers will not have access to the right financial and management resources to progress and complete the transaction and are simply not in a position to buy. So, how do you deal with the problem? Use a broker? A practice broker will select a shortlist of the right buyers for you, so you do not have to go through the pain. Obviously, there is a price for the brokerage service, and only you, really, know what is right for your clients. If you are not using a broker and are going down the For Sale By Business Owner (FSBO) route, then you need to take some steps, being confident you can offer a viable business proposition to the right purchaser. Your headset. You need to understand the importance of selecting the right shortlist of buyers, who: •&nbsp;&nbsp;&nbsp; you can trust not to waste your time •&nbsp;&nbsp;&nbsp; you can trust not to divulge confidential data •&nbsp;&nbsp;&nbsp; you would feel comfortable recommending to your clients •&nbsp;&nbsp;&nbsp; you would feel comfortable working with if there is a transition I hope I’ve convinced you of this, by putting it in $ terms. The early pre-qualification of potential buyers is therefore critical for the successful sale of your practice. But won’t I put off potential buyers if I rule too many out too soon? A common misconception held by many practice owners that go down the FSBO route is that they fear they will frighten prospective purchasers away by qualifying them too soon. Be confident in your business. Only a few buyers will be really serious, and you can always open up the list again. Pre-qualification is a standard practice in the sale of any business. In fact a serious buyer will expect you to go through a pre-qualification process. An individual or business that is seriously looking to purchase your practice will expect to be pre-qualified and a failure to undertake this task in a robust, professional yet fair and reasonable manner will set alarm bells ringing.&nbsp; Draw up your pre-qualification plan. 1. Identify the information you will or will not disclose in the advertisement FSBO practices should NOT share any specific information about the practice (including your name or the practice name) until after all potential purchasers have been pre-qualified and confidentiality statements signed.&nbsp; Even then, information should be fed in instalments, until an element of trust has been established and the buyer identified as a serious purchaser.&nbsp; Maintaining confidentiality is key to any sale. 2. Decide how to maintain confidentiality in the prequalification process 2.1 Initial enquiries The bigger the buffer between the FSBO and the potential purchaser the better at this stage.&nbsp; Consider using a trusted and reliable third party, such as your lawyer, to handle initial enquirers or to play an active part in the screening. Otherwise, here are some considerations you might bear in mind. Email. Needless to say do not use your corporate email address or any personal email address which can be used to identify you or your business. So create a separate email address to handle all communication relating to the sale.&nbsp; Google offer a free email service called Gmail (www.gmail.com) though similar free services can be obtained from MSN (hotmail) and Yahoo (Yahoo mail). When creating your Gmail account consider using a generic username (such as practicesaleflorida@gmail.com). Phone. Consider establishing a separate telephone service in order to receive and respond to enquiries.&nbsp;&nbsp; Even if your home telephone number is not listed, be sure to ensure that your answer phone doesn't give away your identity!&nbsp; Consider getting a cheap pay as you go no contract mobile phone. Postal service If you are considering using the postal service in any way at this stage to pre-qualify potential buyers consider establishing a separate postal address. 2.2 Confidentiality agreements: should you use them in pre-qualification Confidentiality agreements are good for the seller and the buyer. •&nbsp;&nbsp;&nbsp; Brokers will often ask potential purchasers to sign a confidentiality or non-disclosure agreement very early in the pre-qualifying process, more often than not as part of their registration procedure.&nbsp;
 •&nbsp;&nbsp;&nbsp; Sellers should not share information with potential purchasers that identifies the practice prior to a non-disclosure or confidentiality agreement being signed. &nbsp; So, in fact, you may prefer a mutual confidentiality agreement covering both buyer and seller. Buyers also will expect their sensitive data to be respected as well.&nbsp; This is a statement of your good faith. The precise legal form might vary from State to State.&nbsp; Ensure that any agreement that you have is run past your legal counsel. What if buyers do not want to sign a confidentiality agreement? Such an agreement is the basis of a relationship of trust and open communication through the process. If someone does not wish to sign such an agreement, then you are probably better off excluding them from the process. 3 IDENTIFY PRE-QUALIFCATION INFORMATION AND ranking CRITERIA 3.1 Decide the criteria will you use to pre-qualify possible buyers, and the information you ant from buyers Go back to your objectives for the practice sales process. What factors are important to you? These could be: •&nbsp;&nbsp;&nbsp; Financial sales price: size and financial stability of buyer are key here •&nbsp;&nbsp;&nbsp; Earn out process: your ability to work with the buyer post-sale; in a people business, a lot depends on personality •&nbsp;&nbsp;&nbsp; Ensuring your clients are transitioned appropriately: do buyers have the right business experiecne •&nbsp;&nbsp;&nbsp; Buyer’s ability to grow the practice And of these factors, which are the most important? You will have to rank respondents on a number of criteria, so you can come to a judgment as to which to take further in the process. You should set up a pre-qualification sheet, and on this you list buyer details such as income, location, sector, size, and anything else you can find out about them. You can rank these in order of importance, and then score your respondent according to these criteria. The ranking is up to you: you need to remember what it is YOU want to achieve from the practice sale process. Depending on your priorities, the rank given to each factor may differ.
-- Income ---&gt; Gives you an idea as to size -- Number of partners and history ---&gt; Provides an understanding of their practice -- Location of main and satellite offices ---&gt; They may wish to grow in your areas -- Main business sectors ---&gt; Do these fit with the profile of your firm -- Extent of services offered ---&gt; Do these match what you currently offer your clients; do they offer more services -- Investment capability: access to financial resources ---&gt; Affects the feasibility of the purchase, whether te buyer may wish to defer, and, indeed, the timescale 3.2 Determine what information to give buyers at this stage What questions are buyers likely to ask? To avoid breaching confidentiality, prepare scripted answers to the questions that you expect potential buyers to ask at this stage.&nbsp; Naturally these answers should not give away the identity of your practice. Here are some examples -- Your practice size and income ---&gt; Our average income over the past x years has been $y -- Number of clients ---&gt; We have X clients accounting for Y billings -- Number of employees ---&gt; We employee Y people ...and so on 3.3 Using the advertisement to get pre-qualification information from buyers What do we mean by this?&nbsp; Well to put it simply your advertisement needs to sign off with more than the words "Please contact the Seller for more information".&nbsp; Consider asking potential purchasers to respond with specific answers to questions that you consider are relevant and important to the sale. For example, you could sign off your advertisement like this: "If you are interested in hearing more about this practice could you please provide details on your business experience, the time frame that you are currently working towards, why you are interested in acquiring this practice and how you plan to finance the deal". Alternatively, rather than signing your advertisement off in this way, you could consider using a pre-prepared email response which you send out to all initial responders along the lines of: "Thank you for responding to my advertisement.&nbsp; Could you please provide a description of your business background, the size and type of practice that you are looking to acquire, your preferred timescales, and your investment capability." By posing these questions you are effectively enabling unqualified buyers to 'opt themselves out' of the process. 4. Determining the right buyers: business experience and resume 4.1 Do you think the buyer right for your practice? You will want to sell to a buyer that has the necessary skills, qualifications, experience and ability to run your practice. This is particularly important in any deal where the seller is carrying risk in the transaction (such as an earn out agreement).&nbsp; The last thing a FSBO wants is to effectively sell to the wrong a buyer who post sale manages to lose too many clients. This type of decision can not only damage years of your hard work, but will more than likely have an impact on the final price that you receive if part of the terms of sale are dependent on future revenue streams. 4.2 Does the buyer think they can run your practice? Assessing whether a particular buyer has the necessary ability to run your practice is a key factor for you and the potential buyer. The enquirer might conclude that your practice is not the right opportunity for them. So what you give them needs to inform their judgment too. Practice owners have the greatest understanding of what it takes to effectively manage and run their business, whether it be the type of specialist work the firm undertakes, the type of client's the practice serves, or the management skills needed to handle and motivate key fee earning employees. 4.3 Are they the right buyer? Individuals A simple way is to ask potential purchasers for a copy of their resume.&nbsp; Most brokers do this as part of their vetting procedure so there is no reason why a FSBO should not take the same course of action.&nbsp; In many cases it may have been a number of years since the potential purchaser has put one together. You can learn a lot from this, not just the content, but how professionally this has been put together. Resumes that appear to be rushed or show signs of little thought, care and attention do not suggest a serious buyer.&nbsp; The amount of effort that a potential purchaser puts into their resume can be interpreted as an indication of the seriousness of their interest in your practice.&nbsp; Serious potential buyers will be keen to impress. Find out more from softer questions from 'softer' questions such as how long they have been looking to purchase a practice.&nbsp; Often where buyers have been looking for a long period of time they are simply window shopping.&nbsp; Larger entities If it is a larger partnership acquiring your practices, you may want to find out if they have successfully managed acquisitions before, what the corporate brochure looks like, and how quickly they respond to your questions. 4.4 A buyer’s financial resources You need to identify your criteria for determining if potential purchasers have the financial capability to purchase your practice and ensure that this process is fair and reasonable. Access to funds. In fact, the buyer must have access to funds to: •&nbsp;&nbsp;&nbsp; purchase your practice. •&nbsp;&nbsp;&nbsp; supply the necessary working capital, if needed, to support the business post transaction. Is the buyer going to the market for funds? What is available in the financing market.? Sellers should consider researching the current state of the financing market themselves to get a firm understanding of the what offers are currently available to potential purchasers.&nbsp; Good brokers that operate in the accountancy and tax practice market have a solid grip on financing trends and are quick to identify any weaknesses in financing arrangements proposed by buyers.&nbsp; Does the buyer have arrangements in place already? Serious buyers have cash and financing arrangements approved or are at least some way down the path of approval.&nbsp; Potential buyers that have thought little about how they are to finance the deal or who offer vague reassurances on finances need to be treated with caution. Brokers will initially request a disclosure of the cash available to fund the transaction.&nbsp; Some go further and request personal financial statements and undertake credit checks. Is the buyer financing the acquisition from selling their home? In a number of transactions, cash will be derived from a buyer's home equity.&nbsp; If that is the case then delve a little deeper. Find out if the process has started, if the buyer has opened discussions with their bankers and financial advisers: perhaps they are already prequalified for a business loan. This is naturally a sensitive area, particularly for a FSBO transaction and needs to be treated as such. 5. What happens if buyers don't want to pre-qualify? Well, you’ve saved yourself a whole load of potentially wasted time. If they do not want to pre-qualify, they are not serious buyers, and you should not waste your precious time on them. Don't be surprised or concerned if a number of potential buyers do not allow themselves to be qualified. In these circumstances the prospect simply isn't in a position to purchase your practice, whether it is because they don’t have the financing capability, don’t have the experience, are curious competitors, or are ‘sharks’ looking for a bargain. Regardless of the reason, don’t get drawn into chasing these individuals or relaxing the pre-qualification process.&nbsp; Let them go on their merry way and instead focus your attention on ‘real’ potential purchasers.&nbsp; 6 And finally... Your time. To sell your practice down the FSBO route, you will need to effectively manage ‘your time’.&nbsp; In fact ‘your time’ or rather the time that you can dedicate to the sale is likely to be a major bottleneck in the sales process.&nbsp; Setting up a robust pre-qualification process you will avoid one of the most common errors many FSBO’s make when attempting to sell their practice. A robust pre-qualification process also sends out a clear signal to potential purchasers about you.&nbsp; It indicates you are a serious experienced professional FSBO practice that is interested in only dealing with serious buyers willing to pay a fair market value for the business. A note on structuring the process. Brokering firms typically have a set a structured procedures in place that they use to ensure consistency in their approach to screening potential buyers, most of which start off with a registration form, a request for a resume, a confidentiality agreement and is followed up with an informal discussion/interview.&nbsp; You may be surprised to hear that some experienced brokers actually pride themselves on their ability to quickly and easily identify 'tire kickers', a skill which has been honed over a number of years and through many practice sales. 
Author: 
Dan Crowley, CGMA
 Founder - Accounting Practice Exchange

Pre-qualifying buyers is a difficult task for practice owners to undertake.  Here we dicscuss common methods and techniques that are used to screen and pre-qualify potential buyers of your accounting/tax practice.

Pre-qualifying potential buyers

How to pre-qualify potential buyers

The Accounting Practice Exchange provides a platform for professional accountants interested in acquiring or buying into an existing, successful business, rather than going the long and often hazardous route of starting their own.
Our site not only provides a directory of large CPA firms currently on the market, but also businesses that focus on more niche sectors of the financial industry, including bookkeeping, auditing and payroll management. Whether you’re looking for bookkeeping practices for sale – or even if you already have your own business and are looking to expand with bookkeeping clients for sale – then you’re sure to find useful leads on this site.
Whatever your long-term goal, it’s paramount to have a clear understanding of what the pros and cons are in terms of purchasing any kind of business. This page takes a more focused look at bookkeeping, discussing the reasons for and against, presenting some valuable tips on how to carry out a purchase and also presents some alternative options, such as the idea of buying an online bookkeeping business for sale.
<h1 style="font-size: 200%;">Why buy a bookkeeping practice?</h1>
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The only simple answer to the above question is that acquiring an existing practice improves your chances of success, both in the short and long-term.
But there is a caveat; you need to mitigate major risks, which are:
&gt; Retaining employees
&gt; Retaining clients/accounts
&gt; Conducting a thorough due diligence report
Once these common risks associated with buying any accountancy-relating business have been mitigated, smart entrepreneurs are then able to use these risks to their advantage, giving them the upper hand over other businesses starting from scratch.
We’ll go into how to manage these risks later on (skip to our ‘top tips’ section). But let’s suppose your acquisition goes to plan and you are successfully able to retain the employees and client list of the business – after conducting a full and extensive due diligence check, as well.
What you are left with is an up-and-running business with revenue rolling in from the start. You will already have (hopefully very happy) employees working for you, and (hopefully even happier) clients on your books. You are therefore in a position in which many young entrepreneurs only get to after many years – and many startups fail to reach altogether.
Building up a list of lucrative, loyal clients can take years; in buying a bookkeeping firm for sale, you are essentially acquiring a whole client list after signing on the dotted line – and, of course, ensuring the acquisition funding is in place.
This same notion runs true for employees, too. Starting your own business will mean much of your time and resources are spent on recruitment – with many qualified accountants or bookkeepers already in gainful employment and reluctant to switch jobs.
As well as the top-priority things (i.e. instantly gaining employees and clients), another advantage to buying any kind of business is that you won’t have to sweat on many of the smaller details, which can actually be very time consuming for new venture owners (and after all, time is money). For example, leasing out office space, branding, setting up appropriate marketing strategies, acquiring the necessary business practice licenses etc.
One final advantage worth quickly pointing out is the great value for money purchasing an accounting or bookkeeping business can often present. Providing an initial upfront investment, either through a lump sum or financing the deal through banks, can seem a little daunting for prospective buyers at first. But in reality, many accounting or bookkeeping owners do look for quick sales of their business for relatively low prices, and this is not necessarily a red flag that indicates the poor performance of such business. There are a variety of reasons as to why owners contact us and other online directories who want to quickly sell their business. For example, they might be reaching retirement age and looking to get their hands that cash quickly, while other owners may be switching firms to join partnerships in well-paid positions.
<h2 style="font-size: 200%;">Top tips on buying a bookkeeping practice</h2>
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As mentioned before, the most important thing to consider when looking at bookkeeping firms for sale and deciding whether a full business acquisition is right for you is to identify the major risks, and formulate a concrete strategy as to how you are going to not only mitigate them, but also use them to your advantage.
Let’s start with an overview of retaining employees.
Chances are, when looking for a bookkeeping book of business for sale or related business, you’re probably more worried about retaining clients than existing employees after the deal goes through. And this could be a major mistake.
During any business acquisition, an element of doubt lingers over all employees; while they’ll probably be constantly told management that it’s all ‘business as usual’ during the transition process, it’s only natural for employees in this situation to question whether they’ll still be in work in the near future. They may also be eager to know whether they’ll be entitled to the same benefits and enjoy the same working conditions (e.g. Working hours, office environment, job responsibilities) etc.
As the new business owner, it’s your responsibility to take care of each and every concern your new employees have. And this should start at the beginning of the transition process; you don’t want employees to be looking to swap companies just because they have doubts over their positions.
Part of longer-term employee retention involves getting to know those working for you; for example, some may be more ambitious than others, while some might take on job responsibilities outside their scope of work. All of these issues will need addressing with your best HR cap on.
<h2 style="font-size: 200%;">The big one: client retention</h2>
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Whether it’s a small bookkeeping business for sale, a payroll business for sale or another other related accountancy practice, the no.1 worry for new owners is whether existing clients will stay on board. After all, this is essentially what your investment is getting you – not the shiny new Macs and ergonomic office chairs for each employee – but that list of accounts.
Here’s the simple fact: If you
&gt; ensure that the transition process is smooth;
&gt; retain your best and most valuable employees (and keep them happy) and;
&gt; do a fantastic job at running your new bookkeeping business (which you have spent years training to do)
…the vast majority – if not all of your clients will carry on their existing business relationship with the practice.
The biggest risk associated with client retention is when new owners focus their efforts on trying to retain 100% of the existing accounts – with each one receiving equal time. This can often mean that client A, who represents 1% of the bookkeeping revenue, will receive the same attention as the next client B, who is much, much bigger and represents 20% of the annual revenue.
The simple way of avoiding this pitfall is to do your due diligence first. Not only will this enable you to establish how the firm operates, but it will also give you an invaluable insight into the payroll clients – i.e. how much each one contributes to the firm’s annual revenue, how much time they consume, and how much effort should be put into retaining them from day one.
Time to start looking?
We hope the information above has been useful. Please feel free to head over to see our diverse range of financial businesses for sale in the US, which includes everything from remote bookkeeping business for sale (or ‘virtual bookkeeping business for sale’), as well as larger CPA practices.

Before buying your first bookkeeping practice ensure you read our top tips when searching for a bookkeeping business for sale.  Also includes details about finding the best bookkeeping practices for sale in your local area.

Bookkeeping Business For Sale

Accounting Practice Exchange provides information, tips, and guidelines for accountants or professionals involved in the industry who are interested or considering buying an accounting firm – rather than setting up a business from scratch.
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Taking over or acquiring an already established firm is commonplace in the accounting sector, and there are numerous advantages of doing so, as we shall shortly explain. You can also check out our top 10 tips that offer useful advice on buying an accounting practice.
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<h1 style="font-size: 200%;">Why buy an accounting practice?</h1>
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Whether you are an entrepreneurial Certified Public Accountant (CPA) with your heart set on starting your own accountancy firm (as a ‘startup’) or a CPA wanting to buy an accounting practice, there are plenty of risks involved whichever route you take.
Put simply, the main reason as to why people tend to go for the second option, i.e., buying an up-and-running firm with accounts, employees, licenses and office leases already in place, is that there are not as many risks. Additionally, those risks that you are likely to face, such as losing accounts or staff, are much easier to take control of compared to risks associated with startups, which can often fail in the first 12 months due to reasons beyond your own control.
From a more optimistic standpoint, many CPAs see that the advantages of buying an accounting practice outweigh the risks, too. For example, some of the issues as mentioned above, such as retaining clients, accounts, staff and office space, if managed properly and professionally during the business takeover, can be of a huge advantage as you won’t have to set up these things yourself.
This all boils down to one important point: a newly-acquired firm can start bringing in income from day-1; depending on the size of your initial capital injection (i.e. how much you paid for the firm), as well as how well you manage and retain old clients, you may be able to see a return on investment in a relatively short space of time.
<h2 style="font-size: 200%;">Top 10 tips on buying an accounting practice</h2>
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If you are asking yourself ‘should I buy an accounting practice?’, then you may well want to read our Top 10 tips below that offer some advice on various topics such as how to buy an accounting practice and the transition of the business to the seller.
1. Scout around for small, profitable firms with older owners. The reason? Many CPAs reaching retirement age are likely to be considering the sale of their business in the next few years and building relationships with them early on can be beneficial to all parties.
2. All you need to start: some traditional networking! At first, it can be daunting when trying to find an accounting practice to buy. There are a plethora of good websites out there that list CPAs that are up for sale, but some of these may be difficult to navigate. By attending CPA and accounting networking events, you can directly reach accounting practices that could potentially be looking to sell – or at least let them know you are looking for acquisitions should they ever be looking to sell their business.
3. Put emphasis on profitability, not revenue. This point applies to the firm’s valuation as well as your final decision whether or not to buy. For example, if you buy into a firm based on its sky-high revenue alone and neglect the potential risks and overheads (such as staff and office space), then you might be waiting a long time to see that return on investment. For example, if you buy an accounting business for $50,000 that brings in $50,000 a year, that may sound like you’ve found a winning lottery ticket. However, if only 20% of that revenue is profit (i.e. $10,000 per year), you won’t see a penny back on that initial investment for 5 years!
4. Do your homework on the firm’s client base. This information, which can easily be obtained from the owner or during the course of a due diligence check, is essential to you as the buyer, as the firm’s existing clients and accounts should match up to your own areas of expertise, interests, and ambitions.
5. Get the necessary help: Any large-scale company takeover or merger requires a whole team of lawyers and independent audit agencies to make sure everything goes to plan, is done by the book, and is completed in the best interests of both parties involved. To buy an accounting firm won’t require as much help, but it is worthwhile engaging an independent auditor or broker to oversee things like the company’s valuation, or even a lawyer to handle the accounting practice buy-sell agreement.
6. Start your due diligence early. This step, in fact, simply starts with a conversation with the owner of the accounting practice. He or she, depending on how interested they are to sell up shop, should be able to provide you with all of the most important information you need to know, such as the history of the practice, the financials (although these should be verified), the staff, working conditions etc.
7. Consider to buy a remote accounting practice: With prices for office space on the rise along with more advanced accounting software, apps and cloud storage readily available, many accounting practices have gone remote – or semi-remote, with part of their staff working most days from home. Consider this as one of your options when thinking about how to buy accounting practice as it can often work out to be more affordable and profitable in the long run.
8. Carefully plan how you will finance the transaction. Remember, just like buying a house or car, you have plenty of options at your disposal in terms of how you are going to pay. Normally, the bigger the down payment the better (to avoid interest on business loans). However, many bank financing deals can be obtained to fund your transaction if you have the right credentials, business plan and a suitable cash deposit .
9. Consider buying in. Another popular option for entrepreneurial CPAs, rather than buying an accountancy practice flat-out, is ‘buying in’ as a partner or in a similar position. This opportunity may arise when slightly larger firms need to replace one of their retiring partners or when they are looking to expand. This begs the question - how to buy into an accounting practice? Obviously, various issues need to be considered especially regarding the valuation of your equity that you are buying. However, most of the above tips should still apply - even when buying a minority proportion.
10. Questions, questions, questions. While the major aspects of any CPA firm takeover will look at the client base, staff, turnover and profits and overall financial audit, it’s a good idea to formulate a whole list of questions ready to pose to the owner or partner; these will give you a clearer picture as to the flexibility of the future business operations of the firm, as well as the sustainability of future profitability, and so on. For example, how many hours does the owner/partner/key management work per week – if the owner is overworked doing 10 hours a day, 6 days a week, is this really what you want to be doing? Also, what are the existing terms of the firm’s staff employment agreements (and how will a takeover affect these?); What are past client’s experiences with the firm?; How long will the acquisition take and how involved will the current owner be regarding the facilitation of the transaction?
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Whether you are juggling the possibility of starting up your own accounting practice, buying a firm outright or purchasing part of the equity and becoming a partner in an existing firm, the potential for entrepreneurial CPAs at the moment really is huge.
We hope the above information on buying accountancy firms, as well as our top 10 tips have been of use.
Please feel free to get in touch if you have any questions or comments about the content above or any other page on accountingpracticeexchange.com.

How to buy an accounting practice, from finding the best opportunity, to ensuring that you buy an accounting firm that aligns with your budget & strategy.

Buying An Accounting Firm

Are you are looking to buy a CPA firm? Then this page runs through some of the essential information you need to know beforehand. We take a look at why this can potentially be a great opportunity for you on a business and financial level, as well as how it can actually be achieved securely and successfully by looking at some of the things to consider when buying a CPA practice.
<h1 style="font-size: 200%;">Why buy a CPA firm?</h1>
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There are obvious advantages to starting your own business yourself in any kind of industry; for example, there is usually less upfront capital required and you might find greater freedom when it comes to making those all-important decisions. However, many individuals and partners decide that buying into a CPA firm is a better choice than starting out from scratch.&nbsp;
Firstly, already-established firms enable you to get started straight away, without having to fuss over what some people might consider the ‘small stuff’ – such as renting office space, having relevant business licenses in place and so on.&nbsp;
Another big advantage (or disadvantage from the startup perspective) is that, in general, income will be rolling in from the get-go – providing that you are not buying a non profitable CPA firm (although this is still an option in some cases). This is a huge issue for startup entrepreneurs all around the world, and not just those in the accounting industry. Capital has to raised and injected into a new business, and there is never any guarantee when – or if – the profits will start to emerge. In fact, some estimates suggest that over 75% of all startups fail.
It is also worth considering that CPA firms generally have a set of successfully-proven systems and procedures in place, and, if you are able to retain the majority of the firm’s staff, maintaining those well-established client relationships should be feasible. Again, this will depend on the level of loyalty of each client, as well as their faith in which they have of the smooth running of the business ownership transfer. And this is the point we come onto next… how such transfer can actually be achieved.
<h2 style="font-size: 200%;">How to buy a CPA firm?</h2>
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The process of buying a CPA practice is different in many ways from regular business takeovers or large-scale acquisitions or mergers. In fact, it can even be more straightforward than buying out a small business or company. The reason? Many CPA owners, as they reach retirement age, seek a quick and convenient way of ‘cashing out’ on their firm that they have successfully built up over decades.&nbsp;
Needless to say, the selling off of a successful firm can generate a lump sum amount that accountants can put towards their retirement, pass on to their kids (who haven’t decided to pursue a career in accountancy) or invest in something else.&nbsp;
This whole concept creates a healthy buyers’ market, meaning that those looking to into this, especially those thinking about buying a small CPA firm, can easily discover a plethora of profitable firms that are either actively up for sale, or that would be potentially interested in selling up shop.&nbsp;
Extensive research can be done online to discover small firms with older owners that are up for sale (or that might be interested in selling). However, one of the most effective ways of actually getting the ball rolling is to do it the old-fashioned way: pick up the phone and simply ask. Worst case scenario is that you get a firm “not interested”, while on the other hand, you might just land yourself a little gem at half of the cost (and risk) associated with establishing your own practice.&nbsp;
Once a lead has been established with one or more firms, there’s obviously a long list of other conditions and issues that need to ironed out between yourself and the owner of the firm. The big one here obviously is price – i.e. the valuation of the firm, as well as how the payments will be made (all upfront, monthly installments etc.), whether the firm’s staff will be kept on, what the firm’s office leasing conditions are, and so on.&nbsp;
Valuating the firm – and ascertaining whether it is actually going to profitable in the future, all depends on your due diligence.&nbsp;
<h2 style="font-size: 200%;">Buying a CPA firm due diligence</h2>
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Unlike the due diligence processes involved in large-scale mergers and acquisitions where every single transaction of the past x-number of years has to be tracked and given a full audit, the due diligence process when buying a CPA firm doesn’t have to be as complicated.&nbsp;
In fact, the first step of you due diligence (if you’ve been following above) has already been ticked off; i.e. you have met the pre-existing owner, created a dialogue and mutually agreed upon the terms. This should have given you a reasonable idea of the firm’s history, whether the owner is trustworthy, who his or her major accounts are, what the firm’s staff’s level of expertise is, and so on.&nbsp;
Naturally, the next step is for you to delve deeper into the firm’s accounting records and simply take a look for yourself.&nbsp;
For example, you will need to:
- &nbsp;Look into their pricing systems (and whether you think what they are charging is right for you as an accountant)
- &nbsp;Find out how their billing practices work
- &nbsp;Look into client files (or samples) to gain an understanding of the quality of work the firm typically produces (if there are errors and missing pieces, this is a big red flag)
- &nbsp;Obtain a copy of the documents showing the firm’s reported revenues, expenses and tax returns over a set number of years
Remember, a due diligence investigation should always be carried out so you can obtain a clear picture as to the true valuation of the firm, as well as spot any red flags (such as inconsistencies in the quality of the services provided or discrepancies in their tax returns).&nbsp;
But a due diligence report can also work in your favor when it comes to buying into a CPA practice; for example, understanding the nature of the firm’s accounts – such as their scope of industry, the client’s age and their turnover – will all give you a huge head-start when your first day in your new office comes around.&nbsp;
Aside from the obvious importance of the due diligence report and its subsequent findings, it is always worth trusting your own instincts at the same time; if something seems fishy, it probably is. And even when you are approaching the stage to where you have enough confidence to go ahead and takeover the practice, don’t be afraid to ask additional questions, either to the owner, other staff or to other CPA industry professionals.&nbsp;
<h2 style="font-size: 200%;">Questions to ask when buying a CPA practice?</h2>
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- What are the terms and conditions of the staff employment agreements – and will/should these be re-negotiated at a future date after the acquisition?
- What are my options if I only want to buy CPA accounts – or if other firms want to acquire my accounts in the future?
- &nbsp;What are my options in terms of the firm’s location if I do buy? Can I relocate?
- How many hours does the owner or other partners typically work per week/month? Chances are, if he or she is doing 80-hour-weeks, this might be a contributing factor towards its success!
- What are my financing options and which one suits me best? Just like buying a house, the larger the down payment, the easier the whole acquisition will be. Some surprisingly good bank financing deals can be found to support CPA acquisitions, although normally a minimum of 10% of the firm’s value will need to be put down. And while it is rare to by a CPA firm flat out, it is possible.
- How long will the acquisition transition take and what are the main steps to be taken for the deal to go through? (This point also raises the question as to how much the current owner will be involved in the takeover, for example, how proactive he or she is willing to be during the course of your due diligence process).
- Is there any flexibility in terms of joint ownership rather than buy cpa practice as a whole (if applicable)?
<h2 style="font-size: 200%;">Buy CPA firm: the bottom line</h2>
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It’s quite clear that there are many pros and cons of buying a cpa firm. However, whether you’re considering scooping up a modestly sized firm that is looking for a quick sell, or thinking about buying a larger cpa firm, there is massive potential out there, providing that you follow your own instincts and judgment, carry out a thorough due diligence and seek advice from reputable online sources or even independent financial advisers.&nbsp;
We also hope that the information on this page has been of use. If you have any questions, comments or thoughts on any of the content displayed throughout, please do not hesitate to get in touch.
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Are you looking to buy a CPA firm? Common questions to ask when buying a CPA practice, covering issues such as due diligence, clients & agreements.

Buying a CPA Firm

The Accounting Practice Exchange launched on 1 July 2012.&nbsp; We have recently celebrated our 2nd anniversary and would also like to share with you our visitor numbers for the first 2 years of our sites existance. <img src="/static/images/articles/1404385490.jpg">

Information on the number of visitors the Accounting Practice Exchange has received in the first 2 years of business.

Visitor Numbers

Over 20,000 Visitors

Number of visitors to the Accounting Practice Exchange website in the 7 months since its launch (covering the period 1 July 2012 to 31 January 2013).&nbsp; Source: Google Analytics.

Visitor statistics for the Accounting Practice Exchange for the period 1 July 2012 to 31 January 2013.

Accounting Practice Exchange Visitor Statistics

Website Traffic Volumes

A discussion on the main online advertising routes available to 'For Sale By Owners' and brokers looking to market a CPA or accounting practice.

Where to market your CPA or Tax Practice

Where to market your practice

<h1 style="font-size: 200%;">Why buy a tax practice?</h1>

Accounting Practice Exchange provides a comprehensive directory of accounting and tax practices for sale in the US, which you can browse through by area, type of practice, size and gross revenue. You can also use this site to sell or inquire about selling your own firm by navigating to the relevant tab on our home page.
We also provide unbiased, impartial advice and information about everything related to this thriving buyer’s market, including guidelines on finding a tax business for sale, why you might consider going through with an acquisition (rather than starting your own business from scratch) and some of the technical and logistic aspects worth knowing beforehand.
This page firstly explains the reasons as to why buying an already established accounting business could make sense for you, as a qualified accountant or tax professional.
We’ll then run through a list of Accounting Practice Exchange’s ‘Top Tips’ for buying accounting and tax business for sale.
Why buy a tax practice?
In most industries, entrepreneurs tend to start out by building up their own businesses from scratch. There are obvious benefits to this; for example, the business owner has the freedom to decide how the business will operate, the recruitment policy, where it will be located, who it will work with (in terms of clients), how it is branded, and so.
Essentially, the founder or founders have control over everything from day-one and are starting out with a blank slate.
However, the nature of the accounting and tax practice industry is different to most, meaning that the option ‘to buy’ rather than ‘to start up’ can make a lot of sense for those looking for tax firms for sale.
This is because many firms operate in very similar ways in terms of what work is carried out, as well as how it is carried out. So while establishing a new business from nothing might seem exciting, the end result probably isn’t going to be particularly different to the rest of the completion, thus meaning young startups are at a disadvantage, which can be difficult to overcome.
As well as simply avoiding the pitfalls of starting a new business, prospective buyers also gain a number of advantages – if they plan carefully and conduct full due diligence (which will be explained further in the next section).
The main, and most obvious advantage of acquiring an already up and running firm, such as an income tax business for sale, is that the revenue should be rolling in from the moment you take over ownership. This is primarily due to the fact that you will be purchasing a firm that already has paying, and hopefully very loyal, clients, meaning you aren’t under as much pressure to start looking for new accounts immediately.
Plus, well-planned-out acquisitions shouldn’t normally disrupt the normal course of business; your employees will still be going about their daily work, with the firm’s clients and accountants already in place.
Of course, there may be a certain level of reshuffling in terms of clients and it is important to take the necessary steps to retain existing accounts but, in most cases, that above statement - ‘revenue begins from day-one’ – does run true.
As for revenue from a newly-established firm? That could take weeks or even months; turning a profit even longer and then finally seeing a return on investment? Perhaps years.
The list of advantages can go on, but one final (and major) consideration as to why buying a tax practice for sale by owner is a wise idea is the fact that you will avoid having to go through each and every step of setting up a business.
Firstly, this can be a laborious process (for example, having to obtain the correct licenses to operate and register a new business). Secondly, some CPAs and tax professionals simply don’t have an adequate level of business know-how in terms of physically setting up a new firm from scratch.
Some of these seemingly smaller things, such as branding your business, recruitment, finding and leasing out office space, and obtaining licenses, can quickly accumulate, causing unnecessary hassle when the current market is full of opportunity, including the chance to buy a relocatable tax business for sale as well as an online tax business for sale.
Top tips on buying a tax practice
So, you’re now convinced that snapping up a tax practice for sale on our site is the best option for you. And while taking over an already successful business might be a more straightforward option compared to starting your own CPA firm, there are some important things to take into consideration before, during and after your purchase.
Below, we run you through some top tips in relation to acquiring an accounting firm or income tax business for sale.
Find the right seller for you – and consider their motivations to sell
The reason as to why any business owner would want to sell up shop is extremely important to find out – and trust. On the extreme end of the scale, some might be looking to offload a failing business and cut their losses. However, this is unusual and simple to avoid; for example, a thorough due diligence check into a tax preparation business for sale would uncover how profitable it is, whether it has been losing clients, and, most importantly, whether it has been losing money.
On the other end of the scale, a CPA owner might be reaching retirement age and looking to cash in quick (for those all-important retirements funds), despite the fact that if they held out longer for a higher price, they’d probably get it. This case would present a potentially lucrative buy for those looking to get the best value for money when purchasing a tax firm for sale.
Start your due diligence with a sit-down meeting with the owner/firm partners
Meticulously going through the financial records of a firm is paramount – especial to ascertain whether there are any irregularities in their books or to see if profits are on an upwards or downwards trend.
That said, the first thing you should do when deciding to buy a tax or accountancy practice is to sit down with the most senior management – which could be the founder, manager, partner or a combination.
The reason for this is simple; you need to make sure the firm operates in the same or similar way to which it will be operating under your new guidance. If management’s general values and business philosophy doesn’t match up with yours, you could be heading towards conflict with your newly acquired clients in the near future, as they may not be accommodating to your alternative methods of getting the job done.
Be open to all possibilities
In the world of tax practice sales, we see many owners who are looking to sell their business for a fixed or negotiable price completely outright; in this same relation, many buyers are also determined only to take full control of a company (after all, gaining outright control of a profitable business for a lump sum is a pretty tempting thought).
However, many tax businesses for sale are open to mergers, while others may simply be looking for talented CPAs to buy into their business and take partial control as a partner.
These are all options that you should consider in your quest for a tax business for sale.
Stay in line with your areas of expertise when initially searching for an accounting tax business for sale
This point ties in closely with the point we covered earlier emphasizing the importance of consolidating the firm’s client base following the takeover. To retain trust and then, hopefully, going on to improve business relationships, it’s important that you are able to fulfill the requirements and expectations of your clients.
While some larger accounting firms cover a broad spectrum of different services, some focus on more niche fields such as income tax (you can search for ‘income tax return preparation business for sale’, ‘income tax business for sale’ or ‘tax prep business for sale’).
Look at tax clients for sale
Again, this follows from the previous point in terms of how flexible and open you should be while searching for a tax preparer business for sale or accounting tax business for sale.
You may find, during your extensive searches and communication with CPA owners, that lucrative clients and accounts are up for sale. This may provide excellent potential for existing business owners or represent an option for those looking to start up their own firms and get new clients on their books from the start.
We here at Accounting Practice Exchange hope this page covering the exciting field of accounting tax practice sales has been of use to those interested in the subject and contemplating purchasing a CPA tax practice for sale, either now or in the future.
You can also use our search function (via the homepage) or see our other resources and articles covering the topic of tax accounting business for sale.

Before buying your first tax practice ensure you read our top tips when searching for a tax practice for sale. Also includes details about finding the best tax business for sale in your local area.

Tax Practices for Sale

Tax Practice for Sale

Did you know there are 120,000 registered Facebook users that are CPA's and are aged between 40 and 50?
Did you know that we can get your for sale advertisement in front of them via a well targeted Facebook advertsement?
Watch the video below where we show an example of how Facebook marketing can help you connect with a potential buyer or seller.
<iframe class="img-fluid" src="//www.youtube.com/embed/a0d2s8NTzzQ?rel=0" width="760" height="570" frameborder="0"></iframe>

How to market the sale of your accounting practice via Facebook.

Facebook marketing of Accounting Practices

Can Facebook help you market your practice?

The Accounting Practice Exchange hosts an extensive range of <a href="https://accountingpracticeexchange.com/articles/cpa-practices-for-sale">cpa firms for sale</a>, which you can find on our listings section – including all the essential buyer’s information you need to know before purchasing a business. You can head over there now and use the filter to find a cpa accounting practice for sale in your local area – or find a listed business located further afield. The Accounting Practice Exchange has the most complete list you’ll find anywhere in the US.
This site also provides more in-depth buyer’s guide that offers impartial advice to entrepreneurs in the accounting industry contemplating buying their own practice – be it a CPA firm, smaller bookkeeping business or virtual cpa firm.
Similarly, this page takes a look at some of the essential questions to need to ask yourself when you’re on the other side of the table, i.e. selling your business. For example, how to prepare your cpa firm for sale before putting it on the market, how to understand the complete sales process from start to finish (including the best time to sell), and we also take a look at some of the advantages and disadvantages of buying rather than building up from scratch.
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<h1 style="font-size: 200%;">Thinking about putting your CPA practice up for sale? Then think about these factors.</h1>
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For whatever reason you are selling you CPA practice, to ensure the smooth transition – and that you get a fair price for your business that you’ve spent so long building up – you need a plan of action to apply both before and during the process. Unfortunately, it’s not simply a case of signing the purchase agreement and letting the buyer take it from there.
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<h2 style="font-size: 200%;">Preparing yourself – and your CPA firm for sale</h2>
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Even if you’re not planning on selling your business for another three or four years, this really is the time to start making the first preparations. If you only give yourself a few months to sort everything out before selling, the chances are – just like anything else that is rushed in business – you’ll get a poor price and find the whole acquisition a lot more complicated than it needs to be.
If you’re reaching retirement age in a few years, or just contemplating selling up shop to further another ambition or venture, now is the time to start defining your exit timeframe. For this, you’ll need dates; i.e. when do you want to put your practice up for sale, and when would be your ideal closing date? Once you have a reasonably concrete deadline, this gives you room for clear planning (and none of the last minute panic).
Some things to bear in mind when considering these dates in relation to cpa audit practice for sale: at what point in time would you have a comfortable retirement fund? Would your business be worth more or less than it is now? How many more years do you actually want to carry on working? Does the date coincide with the expiry of an expensive office leasehold? What will the situation of close family members be?
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<h2 style="font-size: 200%;">Narrow down the optimum time to sell</h2>
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Once you have decided on a longer-term plan (i.e. the year you plan to sell), it’s also worth considering the month or relevant ‘season’ to sell.
To enhance the attractiveness of a potential deal, try to sell your business at the very start or during the time of year when the majority of your business is rolling in. For example, this may coincide with the end of the tax year or be dependent on the type of business clients are engaged in (e.g. Tourism would be in the summer months). This way, the buyer won’t have to wait several months before things get busy.
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<h2 style="font-size: 200%;">Prepare and spend time getting your business ready prior to the sale</h2>
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Just like selling a house, the first decisions you have to make are whether (a) you actually want to sell, and (b) when you want to sell. Having explained these above, the next step is to start preparing your house (or in this case, your business) – even if that selling date is years away.
Similar to a house, prospective buyers are going to want to come in and inspect everything; after all, they are not just interested in buying the bricks and mortar, but everything else that comes along with it.
This means that you, as the seller, need to act now in order to get your business in order. One of the first and simplest things to do is sort out all important documentation and make sure it is in full and complete order ready for inspection. These papers include essential business account information, tax records, legal history, business licenses, log books and any other relevant documents that will be required to be presented later down the road.
The owners of cpa practices for sale, if beginning these preparations well in advance, are in effect buying themselves time to get their business looking and running in better shape. First, look at the key strengths, weaknesses and opportunities of your firm. The next couple of years is your chance to iron out the problems, enhance those strengths, and capitalize on those opportunities – all in an effort to make your firm as profitable and efficient as possible. A sleek looking and smoothly running firm that has just delivered two or three years of solid profitability is always going to attract more attention from the buyers’ market, as well as secure a higher overall price.
Cpa firm sales also rely on business owners organizing the way in which the firm or practice carries out work with each client. This can easily be presented to potential buyers by formulating a firm workflow, which sets out how the business manages each job. From this set of documents, buyers will be able to tell for themselves whether the firm is (a) working efficiently, and (b) whether the way in which it works and carries the workflow is in line with what fits their own capabilities as certified public accountants.
When buyers conduct due diligence on cpa audit firms for sale, it’s normal for them to be looking in detail at your existing client base. They’ll be wanting to find out who your biggest accounts are, what sectors they are in, and also whether the firm has any weak clients – i.e. excess baggage that is weighing the firm down with late payments or over-the-top requests demanding more time than is necessary. A simple step to take in order to avoid this pitfall (when it comes to the buyer’s due diligence) is to cut ties with those troublesome clients.
When looking at ‘how to value a cpa firm’, other areas worth exploring as both a seller and buyer would be to look at a firm’s cash flow (i.e. the period of time between when work is completed, invoiced and finally paid by the client in full) and a firm’s charge out rates. High charge out rates together with a short average cash flow rates are both factors that can boost the final value of cpa and tax practices for sale. Again, this goes back to our first point concerning time; if you plan well ahead, these KPIs can easily be turned around in your favour in the short-to-medium term.
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<h2 style="font-size: 200%;">Starting a cpa practice vs buying</h2>
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Simply put, entrepreneurs choose to purchase cpa practices rather than set up their own new businesses because the advantages outweigh the negatives. Or perhaps better rephrased: the risks associated with purchasing an already up and running firm with an existing client base are far less than the risks associated with starting from scratch.
Whether it’s a buyer starting a cpa firm from home or a larger firm wanting to acquire a small practice, the main benefit is that revenue will be rolling in from day 1, whereas startups with no clients often have to wait months to catch their first big break – and then possibly years to turn a profit. Also, the act of acquiring an accounting or tax firm is not just buying a business, it’s actually acquiring a valuable client list and potentially a team of talented employees and financial specialists. This is why so many larger firms tend to shop around for smaller cpas, looking to snap up lucrative clients that would otherwise be impossible to have.
We hope the information on this page had been useful. Please seek legal advice for any <a href="https://davidmagill.co.uk">business</a> acquisition. For a directory of cpa practice for sale by owner – please head over to our homepage, or browse through other informational resources and articles on buying and selling businesses. &nbsp;

Get the latest information about CPA practices for sale in your local area.  The Accounting Practice Exchange has the most complete list of CPA firms for sale across the USA.

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