There are many reasons you may want to buy a CPA firm. One of the main reasons many CPAs buy an existing firm is simple: purchasing an accounting firm that is already up and running is much easier than starting one from scratch. Buying an existing firm, along with existing operations, also minimizes the risk associated with starting a business because the firm will (a) have existing clients (and therefore work in progress and accounts receivable), (b) have an existing space and infrastructure in place (phones, email, server, filing systems, and the like) and, last but certainly not least (c) have existing staff members. These are just a few of the most critical aspects of any accounting firm and, when combined, create an opportunity that simply is a safer bet than starting from scratch.
Still, you must follow the proper steps before purchasing any firm to ensure it is successful, and a business brokerage can help. Below is a quick summary of the most important steps you should consider:
Look for Firms with Retiring Leaders
When accounting firm leaders are nearing retirement age, they are also often considering selling their firms. Identifying these firms early and establishing a relationship with the leaders is a great way to get your foot in the door, and increases the likelihood they will be ready to negotiate a deal when the time is right.
Focus on Profitability
When buying a business, too many people focus on how much revenue the firm has, instead of how profitable it is. Revenue is important, but it is also important to investigate where that revenue is going. Is there a lot of overhead and expenses eating into that revenue? If so, that revenue may not be as beneficial as you think. Also, consider how you can make the firm even more profitable in the future. This can help ensure you are purchasing a firm that has room to grow.
Make Sure There is Chemistry
To move in as the leader of an accounting firm, it is important that you and the clients both feel comfortable. Determine if there is chemistry with the existing clients and if your vision and expectations align. Determining if you have chemistry with the outgoing owner can be helpful with this. He/She likely has chemistry with his/her clients and if you have chemistry with the owner, you will also likely feel that with the client base.
Ask for a Familiarization Period
Purchasing a firm without first familiarizing yourself with the clients and processes is risky and could lead to many problems. Ask the owner for a familiarization period so you can see how the firm is currently being run, meet some of the clients, and have the chance to ask all the questions necessary to make you feel comfortable.
Contact a Business Brokerage to Help
When buying any professional firm, you should not do it alone. There are many things that can go wrong, and a Washington brokerage firm can help ensure those things do not happen. At Private Practice Transactions, we will assist with the purchase of your new firm and make sure the entire transaction goes as smoothly as possible. If you are thinking about buying an accounting firm, call us first at (253) 509-9224 to learn more about how we can help.