Which Path is Most Likely to Maximize Your Net Proceeds?
While attending the AICPA ENGAGE conference in Las Vegas, I met with a CPA I’d known for several years. He had participated in our Accounting Practice Academy, built an outstanding CPA firm, and reached a point where he wanted to sell.
Interestingly, we spent time talking—not about valuation, but about process.
He had begun exploring two different paths for selling. One involved working with an intermediary representing buyers. The other path was engaging a sell-side advisor and running a competitive process.
What struck me was that he wasn’t trying to decide whether to sell. He wasn’t even trying to decide who the buyer should be.
He was trying to decide which process made the most economic sense given his particular circumstances.
His situation also had a few complexities. He had a partner with different objectives, and was still experiencing good growth. Ultimately he decided a limited buyer pool that a buy-side advisor could contribute would be less likely to maximize his net proceeds than exposing the firm to a broader qualified market. In a market where quality CPA firms are in high demand, he believed exposing his firm to more buyers would give him the best opportunity to find the right fit, negotiate the strongest overall price and terms, and successfully navigate the transaction from beginning to end.
I thought about that conversation on the flight home because it was different from many of the conversations I’ve had with CPA firm owners over the years. Many start by comparing advisory fees or compensation models. I think that’s backwards. Fees matter, but they’re only one input. The more important question is whether the process you’ve chosen creates the strongest possible market for your firm. The end goal is to maximize your net proceeds. Once you look at the transaction through that lens, the economics become much clearer.
Markets Create Value
One of the first concepts taught in economics 101 is supply and demand. Markets determine value more effectively than individual participants.
If you’re selling a commercial building, you don’t rely on the opinion of a single buyer. Markets work because they bring together multiple participants, each with different motivations, different resources, and different views of value. The CPA firm market is not an efficient market like a public stock exchange. There is no set market value for each firm. There is no perfect formula to determine what your firm is worth.
One interested buyer can tell you what they’re willing to pay. Every buyer is going to have a different valuation. Our experience has shown time and again, when firms go to market, the offers will vary substantially. One buyer may value your niche expertise. Another may be attracted to your geography, your leadership team, or your particular client mix. Some have access to more capital.
If you haven’t noticed, there is a bit of a buying frenzy going on right now. Regional firms, national firms, private equity-backed platforms, and strategic buyers are all actively looking for acquisitions, and each will place a different value on a firm than the other.
Until you’ve exposed your firm to enough qualified buyers to understand those differences, you’re making one of the biggest financial decisions of your career with only part of the available information. If you’re still trying to understand what your firm might be worth in today’s market, our CPA Firm Valuation Report is a good place to start.
That’s why the goal isn’t simply to find a buyer. The goal is to discover your market and leverage the best price and terms. For a deeper dive on this, read our recent article, How Are You Leveraging Unsolicited Buyer Interest?
The Four Ways CPA Firms Come to Market
Let’s talk about fees. “How much are transaction fees?” It’s a fair question, but not the most important one. A successful transaction isn’t measured by what you pay. It’s measured by what you keep, and your overall satisfaction with the deal. The better question is: “How much can I net from this transaction?”
There are basically four ways CPA firms come to market – and each creates a very different competitive environment.
- The buyer approaches the seller directly.
There is no M&A fee. That can sound attractive, but it assumes the buyer would pay the same price outside a competitive process as they would inside one. That is a big assumption. We have seen buyers move substantially from off-market negotiated offers once a seller decides to run a competitive process. There is a reason buyers often try to move quickly when a deal is off-market.
- The buyer pays the M&A fee.
This is generally a buy-side arrangement where the seller is offered introductions. The advisor is contracted and compensated by one or more buyers, which usually means the seller is being introduced to a smaller universe of potential acquirers. Advisor involvement is often limited to the introductions. From the seller’s perspective, it may feel like there is no fee. But in practical terms, the buyer is still evaluating the total cost of the transaction. Whether there are two wires at closing or one, the economics ultimately come from the same transaction.
- The Seller pays the M&A fee.
This is a sell-side process. There is only a contract between the seller and the advisor, so the advisor’s interests are fully aligned with the seller’s. The process begins with developing a thorough understanding of the firm so it can be presented accurately and confidentially to qualified buyers. Buyers are carefully vetted, introductions are managed, and negotiations are coordinated on the seller’s behalf. When there is sufficient buyer interest, the process may include structured bidding with defined timelines, helping the seller evaluate competing offers while maintaining leverage throughout negotiations and due diligence. The goal is to increase gross proceeds, improve terms, and create an outcome that more than justifies the advisory fee.
- The M&A Advisor is being paid by both buyer and seller.
When an advisor is paid by both the buyer and the seller, they are serving two clients with different objectives. The seller wants the highest value and best terms, while the buyer is trying to acquire the firm on the most favorable terms possible. Most advisors work hard to treat both parties fairly, but dual compensation can influence how buyers are sourced, how negotiations are managed, and whose interests receive the greatest attention. It is one reason many sellers prefer an advisor whose compensation comes exclusively from representing the seller.
Why the Market Matters
A well-managed sell-side process doesn’t simply increase the likelihood of a stronger offer. It provides the seller with an experienced advocate who manages the negotiation, coordinates the process, helps solve problems as they arise, and keeps leverage intact through closing. One of the biggest opportunities to lose value comes after the Letter of Intent is signed. If you’d like to learn more about that stage of the transaction, download our LOI Pitfalls Guide.
The seller gains confidence that the market has been tested before a decision is made. It also gives the seller leverage beyond the initial negotiation.
Over time, experienced sell-side advisors develop relationships across the marketplace. They know who is actively acquiring, what types of firms buyers are seeking, how different buyers structure transactions, and which opportunities are likely to generate meaningful interest. More importantly, they know how to bring those buyers into a process that allows the seller to make an informed decision.
Beyond price, sometimes the greatest benefit comes in the form of identifying a buyer who is simply a better long-term fit for the firm’s clients, employees, and culture.
Looking at the Whole Picture
It’s difficult to evaluate your own business with complete objectivity. As accountants, most of us have helped clients exit, but when it’s your own practice, your employees, your clients, and years of work, the decision is personal. That’s one reason I believe process matters so much. A well-designed process brings clarity to a decision that’s otherwise easy to view through a very personal lens.
When we’re evaluating a technology investment, hiring a key employee, or acquiring another practice, we don’t simply ask, “What’s the cost?” We ask, “What’s the return?” Selling your practice deserves that same mindset.
The advisory fee is part of the economics of a transaction, and it should absolutely be evaluated. But it shouldn’t be evaluated in isolation. The process you choose influences the market you reach, the buyers who participate, the offers you receive, the terms negotiated, and ultimately the confidence you have that you’ve made the right decision.
Long before negotiations begin, you’ve already made one of the most important economic decisions in the transaction: you’ve chosen your market.
Choosing the Right Path
There isn’t one right approach for every CPA firm. The best process depends on your objectives, your experience with transactions, and how involved you want to be throughout the sale.
A buy-side model may be a good fit if you already have confidence in a limited group of buyers, are comfortable managing much of the negotiation and due diligence yourself, and simply want introductions to potential acquirers.
A sell-side process may be the better choice if you want an experienced advocate representing only your interests, broad exposure to qualified buyers, help managing negotiations and due diligence, and the confidence that comes from knowing the market has been thoroughly tested before you make a decision.
As you think about your own situation, ask yourself:
- Am I looking for introductions, or do I want an advisor to manage the entire transaction?
- Can I be as objective with my own business as I am with clients?
- How important is it to expose my firm to the broadest qualified market?
- Am I comfortable negotiating deal terms and navigating due diligence on my own?
- Would I benefit from having an experienced advocate representing only my interests?
- Which process gives me the greatest confidence that I’ll achieve the best overall outcome?
Ultimately, the right choice isn’t determined by who pays the advisory fee. It’s determined by which process best aligns with your goals and gives you the greatest confidence in the outcome.
Thinking About Selling?
If you’ve received interest from a private equity group, regional firm, or another buyer, we’d be happy to have a confidential conversation before you commit to a path. Sometimes we’ll tell you the opportunity in front of you is an excellent one. Other times, we’ll discuss ways to strengthen your negotiating position before moving forward. Either way, you’ll have more information before making one of the most important decisions of your career.
Schedule a Confidential Conversation
About the Author
Brannon Poe, CPA is the founder of Poe Group Advisors, one of North America’s leading M&A advisory firms specializing exclusively in CPA and accounting firm transactions. Since 2003, he has advised hundreds of accounting firm owners on succession planning, valuation, and practice sales throughout the United States and Canada.
Before founding Poe Group Advisors, Brannon worked as a CPA with Ernst & Young. Today, he leads a team of CPAs, transaction advisors, and former investment banking professionals who help accounting firm owners navigate one of the most important decisions of their careers.
Brannon is a frequent speaker and published author on accounting firm succession and has been featured by organizations including the AICPA, CPA Canada, and Accounting Today. He also hosts the Accountants’ Flight Plan podcast, where he interviews leaders and innovators from across the accounting profession.
After more than two decades advising accounting firm owners, Brannon believes that the best transactions aren’t defined solely by price—they’re measured by the long-term success of the firm’s clients, employees, and legacy.
