Buying a CPA Practice – Becoming an “Accountepreneur”
Building a solid client base is the greatest challenge a beginning practitioner faces. Because of this concern, buying a CPA practice does have appeal. It cuts out the need for all the work and time required to build up your client base.
This expectation is reasonable because buying the right practice immediately gives you a reliable revenue stream. It typically will require an investment of 90–125 percent of gross fees, and sometimes more. Although the client base may be the most alluring factor in buying a practice, the entire package must be carefully assessed, especially the firm’s staff.
What can you expect to get for your money? The following are highlights of the major returns on investment:
• You become productive sooner.
Without a purchase, there will be a longer period in which you will lose money while you are working to establish a client base.
You have a chance to establish your own relationship with the clients of the firm. Essentially, you will receive a client list and files, an introduction to the clients, and the opportunity to serve the clients and demonstrate your service, skill, and knowledge.
• Seller’s good name.
The seller ’s recommendation of you and your work to your new clients is critical. To the degree that the seller has a good reputation, this endorsement helps assure that the established client base gives you a chance to serve them.
• Operating aspects of a practice.
You receive information on filing, billing, time systems, client histories, and files, as well as contacts with bankers, local suppliers, and organizations. If you also acquire the office, you can expect contacts with personnel you may want to hire and people within the building who can help you with the transition into your new business. In addition, you should receive the practice’s furniture and equipment, which adds the advantage of maintaining the same familiar surroundings for clients.
• Potential to multiply client base.
The ability to increase the size of the practice based on the acquired client base is one of the single most important factors in buying. You can grow the practice through referrals, as well as by offering additional services to existing clients.