You’ve spent years developing your next generation of partners, but what happens when they don’t want to lead, can’t secure financing, or simply aren’t the right fit to take over?
In this episode, our Ontario Market Leader Darryl Boyd, reveals why so many multi-partner firms are discovering that their “default” internal succession plan isn’t working, and why external sales often deliver better outcomes for everyone involved.
Over his decade with Poe Group Advisors, Darryl has helped the Canadian M&A landscape transform from earnout-heavy transactions to all-cash deals that prioritize fit over spreadsheets.
We explore the uncomfortable truth about internal succession: technical excellence doesn’t equal business leadership, and the partner who’s great at client work may have zero interest or aptitude for running the firm.
The conversation highlights:
➡ Why exhausted accounting firm owners often just need better systems, not an exit strategy
➡ How private equity is slowly earning trust in Canada, and why most CPA firm sellers still choose CPA buyers
➡ The hidden assumptions killing Accounting M&A deals (like the “25% client loss” myth with zero data behind it)
➡ Why the best transactions happen when both parties forget about price and focus on whether the handoff will actually work
We also tackle the massive variability across firms that makes a cookie-cutter valuation worthless: profitability, owner workload, geographic markets, and cultural dynamics all impact valuation more than sellers realize. Whether you’re a multi-partner firm wrestling with succession, a solo tax practitioner planning your exit, or a buyer trying to understand what sellers really care about, this episode will challenge your assumptions about how accounting practice transitions actually work.
Timestamps
00:00: Is it normal for buyers to change terms later? Trust as the foundation of accounting M&A
00:35: Darryl’s intro and background
01:25: From project management to accounting practice sales
03:20: Early Toronto market dynamics and earnouts
04:11: How Poe Group Advisors reshaped CPA market expectations in Canada
05:03: Earnouts as strategy vs risk mitigation
06:04: What makes a buyer go “all in”
07:25: The true meaning of fit in a tax practice transaction
09:30: The rise of personal, relationship-led accounting firm M&A
10:08: Private equity enters the conversation
12:23: Why sincerity matters more than spreadsheets
14:12: The accounting firm sellers who focus solely on price
17:00: Redefining the ideal tax firm client
18:42: Helping sellers think through life after the sale of their tax practice
20:00: When improving the CPA firm delays the desire to sell
22:06: PE and entrepreneurial firms reaching out directly
23:54: Why sellers still often choose CPA-firm buyers
24:59: Opportunity in the CPA industry
25:24: Internal succession challenges
27:12: Why large accounting firms underestimate the open market
28:26: Interest in acquisitions rising among larger tax firms
29:01: Extreme variability across firms
30:23: Sellers’ assumptions vs actual market dynamics
32:11: Market differences across cities and firm sizes
33:08: Why “it depends” is almost always the right answer
34:06: Fit and transition planning done right
35:40: The human side of CPA firm M&A across borders
37:18: The trust accountants have with their clients
39:20: Shared values across U.S. and Canadian firms
40:13: Catching up with past CPA Sellers and buyers & the long-term impact of this work
41:54: The personal nature of accounting practice sales
42:34: Closing thoughts
Disclaimer: The following is an unedited transcription of the episode and has not been combed for errors.
Transcript:
00;00;00;00 – 00;00;09;19
Darryl
is it typical in M&A that you might change things later on in the offer? You know, you make it first, especially if you already have enough information to make you know you want to pay for it.
00;00;09;21 – 00;00;21;13
Darryl
But if you try to do something tricky, well, is the seller going to trust you their whole the whole way they interact with their clients is all based on trust. So you’re kind of out at that point.
00;00;21;21 – 00;00;35;18
Brannon
I’m Brandon Poe, and this is the county’s Flight Plan podcast, where you can enjoy engaging conversations about mergers and acquisitions in accounting, practice management. Listen in on strategies to build a more fun and valuable accounting firm.
00;00;35;19 – 00;01;01;29
Brannon
Welcome to the Accountant’s Flight Plan podcast. I have a repeat guest today, and he is our market leader in Ontario. Darrell Boyd been on before. You might recognize Daryl’s voice or his, picture here. His face on, on the screen if you’re watching. And we thought we would come together and chat about some things that are happening, happening in the market today.
00;01;01;29 – 00;01;25;20
Brannon
And, for those of you that don’t know, Daryl, he is, regional market leader in based in Toronto, Ontario. And you’ve been with us. How long have you been? When did you start? Ten years. Pretty much just about, I think. Yeah, yeah. And you have an interesting background. So you don’t have a traditional accounting background by any means?
00;01;25;22 – 00;01;49;24
Unknown
No. And it kind of project management, which actually fits in well with the line of work that we’re in. Yeah. Yeah. That’s true. You know, it’s interesting that how different occupations, the different experience in life kind of overlap because when I was doing project management, a lot of the work I was doing was they were long term real estate deals, big, land development deals.
00;01;49;27 – 00;02;09;13
Darryl
And you’re working with the same kind of thing that we do, different kinds of scales. But you’ve got agreements, you’ve got these various parties, you’ve got due diligence at various levels. So there was a significant overlap there. And the the people that I were working with, it’s that I was working with at the time, they were just it was it was exactly this kind of thing in a way.
00;02;09;13 – 00;02;31;25
Darryl
So that component of it as far as the, you know, figuring things out, negotiation wise, agreements, tweaking agreements, I learned very quickly that some people are very much sticklers with what their lawyers language. And then there are other lawyers, even on these huge deals. They say, yeah, just kind of put something in there or describe it. And I was kind of surprised sometimes that how, lawyer styles are really different.
00;02;31;25 – 00;02;52;16
Unknown
So that certainly carried over to what we do now, you know, because that’s we’re doing we’re sure. Yeah. We work with a lot of lawyers, that’s for sure. Yeah. It’s interesting because, we started in the market in Toronto and I think it was 2006. Right. And I worked that, developed that market and went up there a good bit.
00;02;52;16 – 00;03;20;21
Unknown
And finally we, as we were growing, we met through an accountant that, that knew both of us. And, it’s been a great it’s been a great run and a lot has changed. Definitely. A lot has changed since 2006. Into the market. So, a little a little story about how that happened. My very first listing in Toronto was or in Canada was in Toronto.
00;03;20;23 – 00;03;51;26
Unknown
And I remember we had, I believe it was 63 inquiries on that firm. Wow. And I only found like two people that were willing to not do an earnout deal. I mean, the turnouts were just every that was how the market was the norm. Yeah, yeah, for sure. It’s very much the norm. And I remember people in my team were saying, why don’t you just, you know, go with what’s happening in the marketplace?
00;03;51;28 – 00;04;11;07
Unknown
And I thought, well, I know this works. And so I think we can make it work in Canada. And we did. And look at us now, I don’t know. I mean, very few of our deals have run outs. Oh, yeah. And, you know, I still get comments to this day, especially if it’s an accountant that’s been around for a while.
00;04;11;07 – 00;04;43;08
Unknown
They’ve heard our name. Maybe they know somebody that’s work with you or they did in the past in, in Ontario specifically or Atlantic Canada. And they’ll comment on how they’ll say you specifically, but how corporate advisors change the market with respect to this. So it’s certainly something that for a lot of them, what sellers kind of wanted to be able to not have, maybe the level of risk they were having before with these notes, it’s also helped them, I think, strategically to just say, hey, how do we really keep the clients?
00;04;43;08 – 00;05;03;24
Unknown
Like, let’s actually think about how we strategize that, like with transition planning, as opposed to just saying, you know what, if the clients leave the agreement, I’ll take care of it. Well, it’s kind of like a lackadaisical approach to to client service. So at a number of levels, I realize in some cases there may be exceptions. And, the fit may not be for everyone, like the big firms, for example, they still.
00;05;03;26 – 00;05;31;19
Unknown
Yeah, in Ontario, that’s kind of their model. I always differentiate between people who approach it as part of their model, their acquisition strategy to have earn outs, and those who approach it as a risk mitigation strategy. If it’s their overall strategy, usually you can’t do anything about that because that’s just the way they do things. But if somebody has an earn out or hold back or something at as a risk mitigation strategy, they’re telling me, look, I just I see a particular risk here.
00;05;31;20 – 00;06;04;06
Unknown
Could we mitigate the risk in this way? But what’s good is that those types of people usually are open to another option. If it’s there, you know, maybe having really good transition planning, a way of following up that can be a way of doing it. So it has been really interesting to see that change. I think we have a particular respect for each buyer to do things in their way, but also respecting the market to say, look, yeah, the number of times we had a buyer miss out on, you know, 2 or 3 listings only to realize, okay, you know what?
00;06;04;06 – 00;06;21;21
Unknown
I just I have to go in with this kind of offer. I have to go in strong because that’s what everybody else is doing. So I’d never push somebody that way. That’s their decision to make. But that’s I kind of that’s kind of the heart of an entrepreneur, wouldn’t you say, is to say, okay, is this the opportunity that I want to not miss out on?
00;06;21;23 – 00;06;41;12
Unknown
Right. And that kind of is all about the asset, right. If it’s the right opportunity, if it truly is a good fit. And what I would consider from a buyer’s point of view of what a good fit is, is a practice where you know you can be successful. And it’s the work is sort of in your wheelhouse, if you will.
00;06;41;14 – 00;07;25;16
Unknown
And, the maybe the style and philosophies are similar from the seller to the buyer. Yeah. I mean, obviously it’s, it’s there’s a lot of factors that go into fit, but, I find that what is interesting, too, is if the buyer and seller can just suspend the idea of how the deal is going to be structured and how it’s going to be, how much it’s going to be sold for, and just focus on, hey, is this is this going to be successful in terms of the handoff is or the staff and the clients going to be well served by this transaction, then?
00;07;25;16 – 00;07;48;19
Unknown
Okay, let’s figure out how to make the transaction work. Right. Yeah. It’s funny as you’re talking, I, I do remember something from, this would have been maybe four years ago. It was a buyer that was really interesting. Great personality. We talk quite a lot, but they were staunchly earnest, you know, in their how they were going to acquire, they acquired at least a couple of firms privately before.
00;07;48;21 – 00;08;06;15
Unknown
But, you know, we enjoy talking to people. So we would have conversations and, it might have been five years ago, whatever it was, the perfect firm came up from this buyer. It was the kind of firm because they were even familiar with this firm. They knew what was. And I remember that day talking to them, saying, you know what?
00;08;06;17 – 00;08;27;21
Unknown
Usually I would take this route, but with this firm, I risk more by not buying it than any possibility of what could happen. They were just so confident. They also knew something of the character of the seller. It was location wise. It was, you know, also a few kilometers away from their, their office. So sometimes it was it was interesting to see the shift.
00;08;27;24 – 00;08;44;17
Unknown
And I respect that. You know, you had a certain way of buying things here but for this firm. And that’s what ended up happening. It was a really good transaction. Things worked really well. There were even little things that came up along the way. There was for example, some question of severance that was kind of the buyer and the seller were working through.
00;08;44;19 – 00;09;04;10
Unknown
But what made it work was that fit that you’re talking about? Because it was it was prior. Both parties knew this is really good. If there’s any way that we can make this happen, then let’s do it. So they weren’t you know, they were still going into it with eyes wide open, but, it worked well. So. And I guess maybe it’s hard for people to see and tell they really like for this person.
00;09;04;10 – 00;09;30;21
Unknown
They had to be in it before they would, before they knew that that’s something they could do. And yeah, yeah, yeah. And it protects the legacy for the seller. The seller wants to feel good about, you know, the practice going to the right person. And obviously the buyer’s wants to be successful for very obvious reasons. So it’s exciting when you see kind of those matches work out just so.
00;09;30;24 – 00;09;54;23
Unknown
Yeah. And, do you think it’s changed some in the market too, from a, what people don’t usually associate M&A with personal, you know, you associate M&A with, you know, hard negotiating and people try to get what they want. And that I that just it hasn’t been my experience with this. And you having done this for longer both in the US and Canada.
00;09;54;26 – 00;10;08;16
Unknown
I’m curious as to whether you’ve seen any changes in either yourself or even with overall M&A. Towards more of a personal way of dealing with things in some cases, I don’t know. I think it
00;10;08;16 – 00;10;24;04
Unknown
varies. I think the market, you know, private equity comes up a lot in discussions that I’ve had recently. As, as you well know, there’s been quite the consolidation period in the United States with private equity.
00;10;24;07 – 00;10;51;14
Unknown
And I want to talk to you about what you’re seeing in Canada around that. But I do think, private equity buyers in general are a little they’re cut differently from your traditional CPA buyer. And, and some of them are I think private equity has a little bit of a tarnished, reputation to a lot of accountants.
00;10;51;16 – 00;11;15;17
Unknown
And some of it’s earned. But I do believe there are some very good firms that are out there consolidating, and they truly care about the integration of the firms that they’re acquiring. And they’re thoughtful in how they’re combining these cultures and how they’re serving the clients and the, developing a team culture that is good for the staff.
00;11;15;17 – 00;11;46;14
Unknown
So they want to stay there and they have opportunity. And, but I do find that there are, more buyers in the marketplace now that are just, you know, I come spreadsheet managers, you know, they’re they’re they’re just looking at the numbers. And that’s bottom line. That’s kind of what they care about. For the most part, that’s,
00;11;46;16 – 00;12;23;27
Unknown
And, and, sometimes it’s not always easy to tell who those people are. Yeah. Well, especially sometimes with private equity, because those who might be at the, you know, making the first contact with, with the seller may not be the ones making the decisions. Exactly. And, what is interesting, though, is I agree with you. I think that the, whether it’s a CPA firm, a bookkeeping firm, accounting attacks firm, there’s a high trust with them and their clients, and that’s not easy for them to let go of in a positive sense.
00;12;23;27 – 00;12;47;23
Unknown
I mean, they want to retire or sell whatever it is, the intentions. Correct. But, I mean, I think it’s almost if you did have a private equity firm and hey, there, like any other buyer, there’s good, bad and ugly, I’m sure. But it’s almost easy, I think. In other words, it’s it’s easy to make the wrong mistakes, and it’s very easy to do things right.
00;12;47;28 – 00;13;05;23
Unknown
If you can get aligned with understanding what that trust is, then, you know. So, for example, even the way that you you make an offer, is it typical in M&A that you might change things later on in the offer? You know, you make it first, especially if you already have enough information to make you know you want to pay for it.
00;13;05;25 – 00;13;34;05
Unknown
But if you try to do something tricky, well, is the seller going to trust you their whole the whole way they interact with their clients is all based on trust. So you’re kind of out at that point. And I think you’re a good buyer. Good private equity, whatever it happens to be that them embracing, okay, we have to be able to go through our spreadsheets as you say, and make sure that this works for us, of course, but let’s deal with it in a different kind of way.
00;13;34;05 – 00;13;53;11
Unknown
So I say that not to say that, you know, what we might think of as typical M&A. Of course it has its place in this particular industry, though if you’re a buyer, it’s relatively easy to do well, I think because you just have to be sincere. And if your business model doesn’t align with sincerity, okay, this just might not be a good industry for you.
00;13;53;18 – 00;14;12;13
Unknown
Yeah. And I think too I mean, I think there are sellers that sit in the category of they really don’t care about the legacy of their firm. They they don’t care what, they just want their money and they want to be able to exit and they don’t really care what happens there. Yeah, those people do exist in the marketplace.
00;14;12;15 – 00;14;45;09
Unknown
I think, you know, it’s interesting because we had a conversation, our team, Bailey, who’s our marketing director, and we were we were sort of redefining or reexamining the definition of our ideal client. And one thing we realized is we really want clients, sellers and buyers. But we were we were having a discussion about people who wanted to sell, who have something else that they want to do after the sale.
00;14;45;12 – 00;15;11;29
Unknown
You know, they have a of a fairly clear vision of what’s next. They don’t have to it doesn’t have to be a perfect vision. But either, you know, they have a new opportunity that is exciting them and pulling them out of the practice or they want to retire. Maybe it’s a early retirement. I’ve had people in their 50s that want early retirement, or they want to substantially slow down, and they don’t want to own a business anymore.
00;15;12;01 – 00;15;43;21
Unknown
But there’s they’re clear about what’s next. They’re not just, hey, if you can get me this much money, I’m out. Because that just becomes a difficult, situation. Often because we find that they don’t always want to. They always. They don’t always sell. Even if you get them their number, they’re like, well, I don’t know if I’m really good, you know, so that when the buyer feels that too, I think, yes, the buyer absolutely feels that.
00;15;43;27 – 00;16;10;26
Unknown
Yeah. And the other thing is, is we like clients who care about their staff in their and their clients. That’s that’s our ideal market. And, you know, if you really want to drill down, we want them to have a good, firm culture as well. So that hopefully we can help them match someone who’s going to, you know, care about that culture and continue it.
00;16;10;29 – 00;16;34;04
Unknown
Obviously, they’ll alter it in some way because no one, no one’s going to do exactly what the seller is planning to do. But oh yeah, of course. But, yeah. And I remember a discussion I had this summer and it’s the summer of the spring. I mean, we don’t take all listings, especially if we see that something isn’t maybe the right fit just for us.
00;16;34;07 – 00;17;00;25
Unknown
By the way, I always do. I don’t know if you do this, but I in my discussions with sellers, I even tell them, look, if you’re going to sell, you’re going through a big life stage here. So it’s even important that you gel correctly with our team and vice versa, because we’re going to be working together through this, you know, not that difficult times, but when things come up, they have to know that we’re trusting each other, we’re working hard for them and that we’re we’re aligned.
00;17;00;25 – 00;17;19;22
Unknown
So there’s this one conversation where I had and I ended up not taking the listing because I just and I know they were just trying to maximize the price of their firm and we do that. But it was just they never had any mention of staff and no mention of I want to make sure that legacy stays on or anything like that.
00;17;19;22 – 00;17;43;16
Unknown
And the impression I kept getting was, you know, we’re just in it for the money. And I feared that that’s what would communicate to the buyer. And I think one thing that you’ve done over the years, branding here in Ontario, and that I’ve continued, is the reason why people will pay cash. There are many reasons, but for practice is because they’re trusting the market that we’ve created kind of thing.
00;17;43;16 – 00;18;02;27
Unknown
You know, they’re trusting that we wouldn’t, that we’re taking on the sellers that really, genuinely want to make that buyer successful. And if I got the sense that they weren’t, then yeah, I don’t want to have that for everybody else afterwards. You know. So we’re going to try very hard for our seller. And I don’t see that these things work against each other.
00;18;02;27 – 00;18;20;03
Unknown
Of course we’re going to try very hard. Yeah. But and, and I think that sort of respect of saying, okay, I respect that one seller may have a particular direction they want ahead with their listing and how they’re doing things, and that’s fine. If we’re not a fit together, then then that’s okay. It’s funny how this word fit comes up so much, right?
00;18;20;03 – 00;18;42;08
Unknown
It’s I know, yeah. It’s, Well, I do think it’s a natural. I do believe, like, when people are starting to think about selling, they’re not committed to selling. They get curious about, okay, what’s my business worth? And that’s perfectly natural and that’s healthy. And it’s to be inquisitive and try to go get information. And we’re happy to have those conversations with people.
00;18;42;08 – 00;19;24;13
Unknown
Right. But you know the, the the amount typically is not the deciding factor of when they want to exit. Right. That’s usually not the primary driver. And obviously people want to get the most money and, but but anyway what I’m getting at is like if you’re curious and you’re thinking about selling, we love to talk to people and help them plan and help them kind of think through, because it’s such a big it is often if someone’s retiring, that is a major life change.
00;19;24;16 – 00;19;46;07
Unknown
So it’s it’s a big decision. It’s my point. Yeah. It’s been I’ve had a lot of conversations this year that have been they started as hey I’d like to sell and as we worked on the firm a little bit to say, you know getting information on what it looked like, we always, I remember years ago branding that you had, you told me, you know what?
00;19;46;07 – 00;20;00;20
Unknown
We want to make sure that somebody is good and ready to sell. We never push people towards selling. And I’ve always taken that to heart because we just don’t do that. So I’m always first saying, okay, what’s the reason for it? And a lot of people are just tired, you know, the way they’ve been running their firm, they’re just exhausted.
00;20;00;22 – 00;20;18;12
Unknown
And there’s one person that I talked to this summer, I’ve known them for probably three, maybe four years now. And the conversation this year was, look, Darryl, I feel like I got to apologize because I don’t know if I’m ready to sell now because the firm is working so well. What had happened is we had talked whatever it was 3 or 4 years ago.
00;20;18;12 – 00;20;35;10
Unknown
We worked on the firm. They just they weren’t charging enough for their and they were working way too much. Some of the typical things that we see. So we work through some of those things. They knew that I wasn’t pressuring them to list, but now they’ve got options. They know that tomorrow, if they wanted to, they could sell and they do extremely well with their firm.
00;20;35;12 – 00;20;51;20
Unknown
But it’s working well for them and that’s okay. Honestly. And I say this honestly, that’s totally fine with me because I feel like we’re there to be able to provide that. And you know, what have I had people’s I had another person a few years back. They had a five year plan. But then one day they called me and it became a two year plan.
00;20;51;22 – 00;21;08;18
Unknown
They said, no, we’ve been doing this for two years of our five years and we want to go now. So I think it’s just it’s recognizing that life just looks different for people. And part of our job is to help them prepare their firm for a sale. And that’s if that’s over two weeks and they’re suddenly want to list again.
00;21;08;18 – 00;21;32;04
Unknown
That’s great. But other people, you know, they’re ready to sell. They thought they were, but then they just needed to fix up the firm. I mean, I know that’s a big part of of APA. Our coaching program is is doing exactly that. Yeah. Yeah. It’s it’s it’s fascinating. It’s you know, and, it’s it’s wild because neither you nor I have ever retired.
00;21;32;04 – 00;21;40;21
Unknown
So we don’t really understand what that feels like, but. Yeah. Yeah, certainly gone through it with a lot of clients and,
00;21;40;21 – 00;22;06;14
Unknown
well, I know you recently spoke to a group of firm owners that had probably most of or multi partner firms. I believe you said revenue in the $10 million range. Right. And are you starting to see in Canada some of the private equity outreach occurring?
00;22;06;16 – 00;22;29;29
Unknown
Are you starting to see firms getting reached out to by private equity to to purchase. They are I think it’s been common even over the past few years, is a combination of either private equity firms or just very entrepreneurial CPA firms or bookkeeping firms or whatever they happen to be saying, hey, we want to grow. We’re going to reach out to firms.
00;22;30;02 – 00;22;51;19
Unknown
I it can be a little flattering when somebody knocks on your door and says that, hey, we’d like to acquire you. In the conversations I’ve had, the ones that have progressed a little bit further, often the comments are that they didn’t really they changed their offer from what they were offering upfront, either as a tactic or they offered something, but they just didn’t know.
00;22;51;20 – 00;23;16;23
Unknown
I mean, they just they don’t know enough about this business. It’s different because when we were there’s something we’ve got a profile, so there’s something there for the buyer. Different type of approaches, different people. We have had, I mean, so far in Canada, I would say more often than not, even if we’re like, let’s say a seller is very open for who their buyer is, the buyer could be, let’s say if it’s a CPA from it could be a CPA firm, or they could be open to private equity.
00;23;16;23 – 00;23;32;06
Unknown
Now there is a whole ownership thing which we could talk about some time, but there has to be a way of doing that because in Ontario at least you can’t you can’t own a firm unless there’s under CPA ownership. And so there are ways that they do it. Think of it as a, as private equity backed as it were.
00;23;32;06 – 00;23;54;05
Unknown
So another firm coming in. But more often than not, the CPA firm ends up choosing another CPA from as their buyer, if they’re listing through us and not a PR firm because they think that’s the best fit. Now, either the right kind of fits haven’t come along with PE or they’re what we’re good PE fits, but it just it has to go to one person.
00;23;54;05 – 00;24;14;14
Unknown
It’s kind of like with just normal buyers. We often have the seller say, look, there are such good buyers here. I’ve got five. It really could be any one of them. They’re all really good. So I think as we’re talking to PE more and more, I think the ones that are sincere, that really want to be able to do this, they’re listening to us about how they present themselves.
00;24;14;16 – 00;24;35;09
Unknown
I certainly have a lot of sellers that are quite flexible. So you know how we said a little bit ago that PE sometimes has a bad reputation? It may be, but I think many of these accountants have worked with their own clients selling and buying businesses. I mean, so they kind of speak this language and they know they’re good and bad companies just across the board.
00;24;35;11 – 00;24;59;15
Unknown
So, it will be really interesting to see what happens over the next couple of years. I remember you saying once that I think private equity recognizes opportunities in this industry that the industry itself may not recognize. And I think that’s exciting, actually, because I think that people often undervalue what’s possible with CPA firms, accounting firms as businesses.
00;24;59;18 – 00;25;03;09
Unknown
Yeah, a lot that could be said on that. But you have been saying that for many
00;25;03;09 – 00;25;24;00
Unknown
years before private equity even thought about acquiring accounting practices. You’ve said, gosh, there’s so much opportunity in these practices and we see it. We see it with our academy. You’re exactly right. Well, what were some of the themes? You know, because I feel like you gave this kind of smaller presentation as a small number of firms.
00;25;24;00 – 00;25;52;26
Unknown
I think you said ten firms or so. Oh, yes. Getting back to that. Yeah. So that was specifically what they were wrestling with is succession planning. And what they originally approached us about was what we call internal succession. So not listing the firm for sale and having a successor in that way, but either training up staff to be able to take over the firm or hiring staff for a position, or buying in as a partner with the expectation that they’ll be taking over.
00;25;52;26 – 00;26;09;00
Unknown
Of course, these are multi partner firms. But they were having problems. They were having problems with somebody coming up in the firm who technically was a great accountant, but they wouldn’t, they wouldn’t be a good face for the firm. Not that they’re a bad person. They themselves wouldn’t want to be like, I just want to do the work.
00;26;09;02 – 00;26;29;07
Unknown
I don’t want to bring the work in. And, so what was interesting in the conversation is because of our experience in selling firms, there is a significant overlap in what works and what doesn’t. You know, when you have somebody that they’re looking to sell and they say, oh, well, I you know, I’d really rather just kind of bring somebody in, train them up for a while and then they could take over.
00;26;29;10 – 00;26;50;27
Unknown
Well, this happens regularly with you and I. And what happens? Well, does it work? Sometimes it does. Sometimes the person either doesn’t have the money or more often than not with me was if they change their minds at the end of the day. Right. So these firms, these larger firms were experiencing the same thing. So we had a really good discussion of just saying, look, what are the things to look for when somebody comes in?
00;26;50;27 – 00;27;12;16
Unknown
How do you determine who’s going to be a good partner to take over the firm? And also, they had no idea the market was as strong as it is. They just had not considered that as a possibility. It was just that’s all the imagine. Was their partnership just continuing on in that way. And I think that’s something that’s really changing.
00;27;12;19 – 00;27;34;08
Unknown
You know, when a seller says, you know who’s buying out there? Well, that’s a long conversation because it varies greatly. There are very good like here in Toronto, there are some exceptional firms run by like I’ll tell somebody like off the top of my head, I know one that’s about somewhere between 6 to 10 million right now, one owner running this firm.
00;27;34;08 – 00;27;51;04
Unknown
And they say, well, how can one want to run that firm? How is who are the other partners? Well, they’re our partners. I mean, it’s a corporate structure. They have client managers and some accountants just they can’t if they’re a partnership, they can’t imagine being bought by anybody else than another partnership. And so we do a lot of education.
00;27;51;04 – 00;28;08;23
Unknown
We just say these other things are out there. They’re true. If you have a firm and say it’s 10 million is the case with some of these, if selling is a better option, are there really good buyers or buyer, you know, teams, as it were, that could acquire you? Yes. I have no doubt in my mind because we’re talking to them all the time.
00;28;08;25 – 00;28;26;03
Unknown
But for them to get their head wrapped around that, you know, it might mean multiple conversations. So needless to say, there are a lot of questions that day. It was a really good, discussion. And I think it will be. And it was interesting as I talked to them, some were interested on the selling side and others thinking, you know what?
00;28;26;08 – 00;29;01;10
Unknown
Yeah, I see what you’re talking about with opportunities here. Maybe we should be thinking about acquiring. So, yeah, interesting discussion for sure. Yeah. Talking about variability of firms like that is one thing that I am still astonished by. You know, we we see so much variability in how profitable they are, how many hours the owners work, how, how they structure their teams, how they structure their leadership teams.
00;29;01;13 – 00;29;29;02
Unknown
It’s really all over the place. And it’s it’s I feel like it’s a privilege for us to be able to see that because we get to see the panels too, which not too many people see the actual panels and see what works. But were there any other any other surprises in this recent meeting or any just just they don’t they don’t understand how how viable the market is.
00;29;29;02 – 00;29;34;10
Unknown
I believe that’s definitely true. We have we were in a team
00;29;34;10 – 00;29;59;23
Unknown
meeting yesterday and, one of the things that we’re thinking about, you know, how do we improve client service. We do this every year. Right. How do we how do we even make it even better next year? And one of the things is we’re going to start giving, actual data like, okay, this is how many inquiries you’ve had on your firm, because most of our clients, they’re not we’re not we’re filtering some of those.
00;29;59;23 – 00;30;23;17
Unknown
So they’re not seeing all the inquiries. And I think a lot of our sellers are shocked that, you know, of just the sheer number of inquiries they have. Yeah. I still think honestly, Brennan the biggest thing is just making assumptions. It’s and I we have actually a webinar that’s going to be coming up in, in January.
00;30;23;20 – 00;30;50;00
Unknown
Lisa. So my colleague in the US, we’re going to be talking about this, helping people to understand, how these deals actually end up working out. A lot of times it’s just a seller getting their mind wrapped around it and just not believing what they’ve been told by other people. Because and I say this to sellers often, it’s not that like if your colleague says, you know what, you’re going to have to stay around for three years for the transition.
00;30;50;02 – 00;31;21;22
Unknown
That’s simply not true. It could be true in a particular instance, but probably not through selling through us. You know, you’re going to have to take a three year earnout, the person who’s telling them that is probably right in their own case, a private deal or selling to a regional firm, something like that. But in our case, in this market, whatever you’d call it, public market firms or something like that, when we’re listing them, what’s true of this particular market and those types of transactions are just not typical with us.
00;31;21;22 – 00;31;40;17
Unknown
And it. Yeah. So I’m in this position of saying, look, I’m not saying your colleague was wrong when they’re telling you that. I always just say it this way. They were incorrect. In this case, they were right in their case. So the things that we just find are typical in our industry, a lot of times people get, it takes them a bit.
00;31;40;17 – 00;32;11;22
Unknown
Yeah. Mine wrapped around and there’s, you know, talking about variability. There’s also variability in locations and different markets like your Toronto market is very different from our Los Angeles market. The Los Angeles market is very different from, you know, say the Charleston, South Carolina market. It’s it’s yeah, there’s different dynamics at play there. There are different numbers of buyers.
00;32;11;22 – 00;32;40;22
Unknown
And each one of those cases, and that’s something that, you know, on the topic of practice evaluation, that’s the lens that we look through is how many potential buyers are there for this practice, because ultimately that is what’s going to, drive the market around that particular firm. But then you’ve got variability within those markets, right? So, you know, $1 million firm might fetch a different multiple than a $3 million firm.
00;32;40;25 – 00;32;49;11
Unknown
They market, but not the same market. Yeah. So there’s so much variability. And I think when you’re talking to somebody
00;32;49;11 – 00;33;08;18
Unknown
who like yourself who says that and just admits that that’s the case, you’re talking to a person who has some expertise or who realizes this because sometimes people just say equivocate. Okay, here’s the way it is when somebody says that, and there’s usually no nuance of it in any way.
00;33;08;20 – 00;33;24;29
Unknown
Sorry to put this bluntly, but they probably don’t know what they’re talking about because life just isn’t like that. It certainly isn’t like that with practices. I don’t say that. Do I say all practices sell for cash? Sure, most of them do. But what are the exceptions? You know, have I had a seller? Have, you know, say five?
00;33;25;04 – 00;33;47;22
Unknown
Well, let me think here something recently five different offers. But they pick the offer that wasn’t the highest price offer just because they liked the fit the best. That’s their prerogative as a seller to choose that. So but as for my data on what the offers could look like, yes, the others were cash offers as well. So for what each seller wants, it depends.
00;33;47;22 – 00;34;06;08
Unknown
So I find I say it depends a lot because it just depends on the situation, the fit and I’m okay with that. So I like to be able to say, hey, there are complexities to life. I want to respect where a buyer is coming from, where seller’s coming from and say, you know what? It depends and let’s have that kind of conversation.
00;34;06;08 – 00;34;21;28
Unknown
But when somebody comes along and says, you know what? Like my lawyer told me, sorry, I’m laughing because I wonder where they get this data. I just had it recently. My lawyer told me that 25% of the clients are going to are going to leave the first year. Well, did you ask them where they got this data? Well, no.
00;34;22;01 – 00;34;44;09
Unknown
So, you know, we sell more purpose than anybody in Canada. And, you know, where did this come from? Where is this data? They didn’t ask us for it. Yeah. So so people just say things time and then people just believe them. I’m saying, well you know, let’s kind of work through that. And hey, if it was the kind of transaction where you closed and you just send a letter out to everybody without doing any planning.
00;34;44;09 – 00;35;05;25
Unknown
Yeah, I can understand that 25% left because you screwed it up. Sorry. That’s right. Yeah. And and I say that as a client, like I part of the huge benefit, I’ve got this major benefit and, or, competitive advantage in this business because I think like a client and it really, really helps. Sometimes CPAs and accountants don’t think like their own clients.
00;35;05;25 – 00;35;24;26
Unknown
So if I got a letter in the mail that said that this transition is happening, but how do you know how I feel about it? You can’t know me, but if you call me, well, then at least you know how I’m interacting with you on the phone. So I don’t know. I think it’s almost a self-fulfilling prophecy sometimes about how deals can go bad.
00;35;24;26 – 00;35;40;01
Unknown
Because if yeah, if you’re going about it in the wrong way, if the fit’s bad, if you don’t do your transition planning, then and you’re probably going to have poor results. Now, that doesn’t guarantee that you’re going to have absolutely the best results if those things are in place, but you’re going to give yourself your best possible chance to.
00;35;40;04 – 00;35;59;22
Unknown
Yeah. Sorry. It’s Yeah, yeah, yeah, it’s it’s a complicated thing and it’s but it’s an interesting it’s interesting too though, is it’s challenging, interesting work and it’s as different as each buyer and seller. It just fell out because the people want to talk. I want to talk a little bit of kind of like, some of the cross-border like.
00;35;59;22 – 00;36;27;19
Unknown
Like what? It’s what it’s like for us to work across the border and how we collaborate with our teams that are working in different countries. And, you know, we talked about a lot of variability on the practice level, but I actually find that doing the work is incredibly similar. Whether you’re selling a deal in Canada or the US, obviously there’s some difference.
00;36;27;19 – 00;36;51;22
Unknown
There’s some nuance. But overall we’re dealing with some somewhat the same, same psychology, the same basic issues. And yeah, I agree. Yeah. I think the, the basics there of,
00;36;51;24 – 00;37;18;03
Unknown
The when I think of it. Okay. I’ve got, I always have this little, like picture in my head of this, of this industry of whether it’s CPAs, also bookkeeping, accountants, anybody who’s taking care of that financial management for their clients. And, there are very few occupations that you can be interacting with your clients. So as an accountant to their clients at a very sensitive level of human behavior.
00;37;18;03 – 00;37;38;25
Unknown
So that’s finances. People talk about all kinds of things and they won’t talk about their money, but they do with their accountant. And I will say whether it’s candid or the US, accountants do tend to recognize that. And so when they tell us that, when they say, you know what? I just I don’t see how I can hand this over to another buyer because my clients, they trust me, they know me so well.
00;37;38;27 – 00;38;04;19
Unknown
What I hear them saying is simply that they’re just saying, this is a trust business now, they don’t know who the buyers are that we’re bringing yet when they see them and know the buyers think the same way, it’ll be fine. But I totally respect where they’re coming from. And honestly, it’s a bit of a treat. I find in this particular industry because almost across the board we know, like I let’s say there’s a general business broker out there and they’re selling it, you know, electrical parts manufacturer.
00;38;04;20 – 00;38;24;17
Unknown
Well, what does fit look like for that? I mean, you could have somebody that’s not really a great person doesn’t really respect their clients, but they run a good business. In this case, you almost can’t have that. You know. So I do find that in either country there is this, this idea of we’re given a trust from our clients to take care of them.
00;38;24;19 – 00;38;42;15
Unknown
And that’s why it it resonates very well. You know, when somebody said, look, I just I don’t see how I could hand this over to somebody else. To me, that actually is initially a positive thing because I know I’m dealing with someone that that respects their clients. So that cares. Somebody that cares. Yeah. Yeah, they actually really do.
00;38;42;18 – 00;39;02;20
Unknown
And I think that’s why they, they nervous sometimes about, oh, how do I sell this? Or maybe I need to have a long transition because of, you know, whatever it happens to be. Now that isn’t always necessarily the case and in the way that we would do things, but it’s coming from the right motivation. I think it makes the wrong assumptions, but it’s coming from the right motivation.
00;39;02;20 – 00;39;20;24
Unknown
I’ve only just thought of that now, but I think that would be the way to describe it. I heard I heard of a I don’t know where this came from, but people don’t care how much you know until they know how much you care. Yeah. So sort of a little little way to remember that. Well yeah.
00;39;20;24 – 00;39;45;05
Unknown
Yeah. It’s that’s, that’s true. Betrayed me for sure. Yeah. Well we’re wrapping up here, when we were kind of prior to hitting the record button today, you were sharing that you had met with some past clients, had sold, and you have you had feedback and just, you know, kind of catching up with them in life.
00;39;45;07 – 00;40;13;06
Unknown
And, it was funny, today I was going through some, some old files. We were throwing out some things and for the shred, you know, to shred old, old client files and, it’s almost like, yeah, you really do remember the clients years and years later, that you work with on these deals. So do you have any, you want to you want to share a couple of those, those, recent meetings you have?
00;40;13;09 – 00;40;39;04
Unknown
Well, yeah. It’s interesting that you brought that up as we were talking about it. It does give you a great sense of satisfaction for what you’re doing and how many people it affects. Because it’s not just the seller, it’s the seller and their spouse. It’s the seller and the buyer. It’s the the staff and then the clients, all of those clients that are depending on them.
00;40;39;08 – 00;41;02;07
Unknown
So I take that seriously. I mean, we can’t keep it all in our heads at one point, but in this recent dinner that I was talking to you about was basically three sellers that had all sold, through me over a period of probably seven years. I would say. And I’m sitting there and they had all known each other in different ways, either whether it was school or working together.
00;41;02;10 – 00;41;21;11
Unknown
And, small boy kind of thing. Yeah, that kind of thing. And it’s kind of hitting you what’s really going on. And they, they came in at different ways. One of them just embraced full retirement, right away. The other one retired technically for a time. And then you know what? They started doing some contract work for their buyer.
00;41;21;17 – 00;41;54;07
Unknown
You know, sometimes people do different things and I but it was I guess it just that sense of of satisfaction, I suppose I’d say pride in the positive sense of the word as well. I suppose Brandon, years ago, when I first, when we first talked, I think it was probably in the early conversations that we have that it hit me how personal of a business this is, which is really interesting because it wouldn’t you wouldn’t think of M&A in this, instance maybe being that way.
00;41;54;10 – 00;42;12;02
Unknown
It certainly is for me. So that’s what kind of hit me. And so when I’m talking to sellers from years back and, you know, we follow up some people, I follow it up. There’s one in particular, the CPA, who he’s actually passed away since. And I still talk to, one member of their family, you know, just following up.
00;42;12;02 – 00;42;32;02
Unknown
So these it’s interesting to see how these relationships continue. It’s, Yeah, yeah. Good stuff. Well, Daryl, thanks for coming back on. And, Oh, yeah. Great. I think I’m sure we’ll probably do this again, but, great. Catch up and talk about some of the new stuff happening in the market. So hope, hope our listeners. I’m sure they got lots of value.
00;42;32;02 – 00;42;34;17
Unknown
Thanks for coming on. Yeah. Thank you.
00;42;34;17 – 00;42;55;13
Unknown
Thanks for listening to the Accountant’s Flight Plan podcast. You can keep the momentum going by subscribing and sharing your thoughts with us. Visit our website at home. Group advisors.com for more resources and tune in next time for more exciting conversations like this one. This podcast was produced and edited by Liesl Eppes of her group advisors. Thanks for listening.
