With more and more of the Baby Boomer generation approaching retirement, many CPA firms will soon go up for sale—giving other firms the opportunity to grow through acquisition. There is a lot of information in the accounting profession about succession planning for those on the sell-side of the transaction. Buy-side planning doesn’t get as much attention, but it is just as critical to making these acquisitions successful.
Both have advantages and disadvantages. First, let’s explore the advantages of both starting a CPA practice from scratch and advantages of buying a CPA practice as well as the disadvantages.
Finding the right accounting practice to buy has a lot of great advantages…as long as you buy one that reasonably fits you. I say reasonably, because you will never find the “perfect” practice.
CPA practice Valuations can and do vary quite a bit. The industry standard rule of thumb is “1 times gross” which is a very long-standing belief held in the accounting profession.
Accounting Practice Transitions can be extremely successful when handled with reasonable care and common sense. That said, some of the basics can be elusive in practice. Here is a discussion of 5 basic concepts for a successful handoff.
Client retention in the sale or purchase of an accounting practice is probably the one topic that all buyers and most sellers ask about. It’s also an often misunderstood topic.
A few years ago I read The Snowball: Warren Buffett and the Business of Life by Alice Schroeder. One of the business adventures the Oracle of Omaha encountered in his career happened when he bought a company from an 89-year-old seller without a noncompete agreement.