One of our main goals for all of our clients is to help keep our transactions as simple as possible. That said, it’s funny how things can often take longer than expected….so to help you expect the unexpected, here is a list of a few of the bigger snags we see come up time and again.
- Licensing-If you are moving to a new state or province, this can take a while. The problem is that the boards that handle licensing issues are often not always in a hurry to process applications. On top of that, the boards don’t always meet very often, so your application can sit for weeks before it’s ever even reviewed. The best way to approach this is to apply early, or your closing can be delayed.
- Insurance-Many loans require the purchaser of an accounting practice to have a life insurance policy where the bank is the beneficiary. If you don’t already have a policy, then you’ll need to get one which can’t always be done right before closing. Assignments of policies also take time. Tackle this one early in the process.
- Lending-Even though the banks are private, the small business administration is a government agency, so the lending process is bureaucratic. On top of that, many banks who are familiar with the lending process are not familiar with the nature of accounting practices. Bankers are conditioned to want collateral and guess what – in an accounting practice –there simply isn’t much in the way of hard assets. There is nothing more frustrating than hearing from the bank that they can fund your practice acquisition, only to later learn that they failed to consider XY or Z when they were initially considering the loan. The best way to avoid this giant pitfall is to work with a banker who is experienced with accounting practice acquisition lending, or to borrow against personal assets so that you can get a conventional loan.
- Transition-A successful hand off is not intuitive. Experience has shown us that there are many overlooked items when it comes to this topic. Check out our earlier article on transition to read more about this very counter-intuitive part of the process.
As an aside, if you are attending the NCACPA Annual Symposium in Greensboro next week, please come and say hello to Stephanie and Carol at booth number 2. We’ll have some giveaways and tons of useful information if you are in the market to buy or sell a CPA firm.