Successfully Selling a CPA Firm

selling a CPA firm

A Comprehensive Guide to Successfully Selling a CPA Firm

One of the first tasks of developing any strategy is to have a clear definition of what success looks like. Successfully selling a CPA firm is no different. What we hope we’ve accomplished with this column is to provide you with a high-level view of the key areas of how the majority of our past clients have viewed success. Many of our past clients have most certainly had unique goals within these five broad categories. What are yours?  


The five key components of a successful deal:

Number one is timing.

Timing your exit properly is crucial. We’ve seen many deals fail at all stages due to inappropriate timing. This could mean the seller is letting go before they are ready, or letting go a little too late.

When we have a seller come to us prematurely, they tend to micromanage negotiations, and sabotage a fair sale because they simply aren’t ready to pass on what they have built. It is a waste of their time, our time and that of the buyer.

Now, if a seller comes to us a few years too late, the practice can be in stagnation or decline and the seller lacks the energy to foster growth in the firm. This can obviously make the sale of a practice less lucrative and more time consuming.

In some cases, it is obvious to an owner when to sell, for instance there is an illness in the family or the arrival of a new grandchild. But in the absence of a major life event, you may be wondering how you will know when the time is right. Here are some factors to consider that can help you achieve optimal timing:


When will you have enough money to retire?

This is both and obvious and important consideration, and often CPA’s have a good understanding of their financial situations. That being said, you likely won’t be ready to sell unless your retirement funds are in order.


Do you have a plan for what you’ll do after leaving the practice?

Knowing what you want to do with your time can be a big motivator for exiting. This could mean you have grandiose plans for leisure and time with family, or maybe even another career pulling you from the practice. A surprising amount of our retired CPA’s find enjoyment in lucrative part-time employment that keeps them stimulated with a much-wanted reduction in time and responsibility.


Once you have decided to leave, how long will the exit take?

This will depend on a number or factors: what kind of shareholder or partnership agreements you have, how marketable the practice is, and the length of time it will take for client transition.

The most important take-away when it comes to timing your sale however is, to have clear goals and realistic expectations.


Number two is finding the right fit.

There are several key areas you should focus on when initially deciding if a potential buyer is a good fit for your practice.


Who is their ideal client?

What kind of client are they expecting to acquire? Does it align with your current clientele? Asking these kinds of questions upfront can give you a good indication of how you relate to this buyer. A good cultural fit is a very positive initial sign.


What is the buyer’s background?

Are they from a smaller firm or a large global firm? What sort of firm culture did they experience during their formative years?  How hard did they work? Ultimately, you want to feel confident in their ability to retain your current employees and clients.


Ascertain the buyer’s management style and ability:

Find out if your potential buyer has ever managed staff before. Do they see themselves being flexible or structured? Understanding how a buyer intends to run your firm can help you decide if your staff and clients would mesh well with your prospective purchaser.


What is the buyer’s technical ability?

Does this buyer have experience in the key revenue streams of the practice, and if not do they seem capable of learning?


How does this buyer plan to grow your firm?

Most of our sellers are emotionally invested in the practices they have built and they want to see it flourish after a sale. Get to know what your buyer intends to do with your practice and how they intend to keep current clients and staff happy.

Along with all of these considerations, your gut feeling can go a long way, so remember to trust your instincts when deciding if a buyer is right for your practice.


Number three is employing a proven process to guide you in the sale.

Poe Group Advisors has developed a consultative approach to selling a CPA firm. We created our process which is called The Seamless Succession™.  This simplifies the sale, maximizes value, and helps everyone involved navigate the sales cycle. Briefly, we divide the process into these five stages:

First, we start by EXPLORING. We want to understand your goals and desires for a smooth sale, your timeline for exiting and the strengths and weakness of your firm.

Second, we look at PRICING. We help you set a fair and attainable price based on six critical, market-based factors. The right terms can mean more value for both you and the buyer. (For more information on pricing, you can download our free pricing guide.)

Third, MARKETING MULTIPLIED ™. At Poe Group, we have over 15 years of experience marketing to accounting professionals, and we pride ourselves on having an unmatched pool of candidates. We vet, and present to you qualified buyers that are capable of purchasing your practice, so that you can continue to focus on maintaining your firm and its value.

Fourth, The Structured Negotiation ™. We maximize the price of your practice, with minimal effort to you. As mediators, we lead deliberate negotiations, often with multiple qualified buyers at once. We also offer buyers connections with specialized lenders. With this, we are able to maximize cash to you at closing.

Fifth, we help with TRANSITION. Part of our role in the sale of a practice is ensuring that the buyer has the right tools to help your practice flourish after your exit. We want to help keep clients and staff happy so that you can step away with piece of mind. Again-we have a unique process that we follow that’s based on hundreds of successful transitions.


The fourth key component of a successful deal is clean terms.

It is popular within the CPA profession to do an earn-out structured deal when selling. This is where the seller transfers the business but is paid only with the actual earnings of the buyer when they take over. It is a high-risk structure for the seller and also often means high involvement for the seller after the sale. We don’t recommend this structure and at Poe Group we almost never have deals with any earn-out component.

Earn-out deals often go hand-in-hand with long seller transition terms. There is high risk to the seller in an earn-out structure that just isn’t there in a cash deal, so the sellers insist on staying with the practice longer than is necessary. In our experience, keeping a seller on after the sale too long confuses roles, creates tension and actually makes client and staff transfers to the buyer more difficult.

At Poe Group we deal almost exclusively with cash deals or cash equivalent deals with no risk to the seller for client retention after the sale. Approximately 90% of our deals have fixed price structures, and over half of our closings are 100% cash. You may sacrifice marginally on price, but the benefit of clean terms is extremely valuable.

Sellers can make a clean break leaving the buyer to run and grow their new business. You get to focus on your next chapter, whatever that may be.


The Fifth and final component is a smooth handoff.

A smooth hand-off is the goal in any deal we close, but some things to keep in mind during this phase of the deal are as follows:

  • Long transitions are rarely (if ever) necessary. It is better to allow the new buyer to foster their own relationships with clients and if a seller sticks around for too long, that process can be hindered-meaning client loss for the new owner.


  • You need to have a game plan. You need to get affairs in order before closing, so that you know exactly how you will be announcing the transition to staff and clients. Preparedness in this instance can make takeover much less stressful. The first month after transition is always busy regardless of the time of year, so plan accordingly.


  • Be clear and honest with clients. Be clear about what’s happening with the firm. There is a temptation to “mask” the sale as a merger or partnership…but we’ve seen this backfire. Honesty is the best policy. It will help to leave those client relationships appropriately to ensure the buyer is set up for success.


  • Staff can be nervous about a transition, so the parties need to work to ease those concerns. Be empathetic to your staff’s needs, they may be nervous about job retention and role changes. Be sure to take the time to address their concerns so that staff is eager to help the new buyer takeover.


  • Lastly, keep in mind that fit is everything. Hopefully by the time you get to the handoff stage, you feel confident in your buyer’s ability to mesh with your clients and staff. Of course, no two people will run a business the same way, but be sure that the buyer you choose will be well liked and respected by both your clients and staff.


Selling an accounting practice can be a hard decision, and an emotional one. Having a clear vision of what success looks like is a great place to start. If you would like more information about The Seamless Succession™, please watch our 16-minute video that will walk you through each of the 5 proven steps.

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