Accounting Firm for Sale

Mergers

Mergers are too often overlooked and misunderstood. Yet they provide all of the benefits of a sale or an acquisition of a CPA firm with very little cost, and few, if any, tax ramifications.  

Benefits to the Smaller Firm

  • Relieving the smaller firm of many financial, administrative and human resource  responsibilities
  • Access to technical and managerial support
  • Keeping ones existing book of business
  • Offering clients additional services and resources resulting in increased billings
  • Growth of firm tied to larger firm, not limited by size of smaller firm
  • Built-in Exit Strategy upon Retirement, Death or Disability

Benefits to the Larger Firm

  • Provides a proven pool of talent
  • Access to a loyal client-base for cross-selling opportunities
  • Access to New Markets and/or Services
  • Increased Cash Flow and Profitability
  • Economies of Scale
  • No Cash is Required

Partner-level Professional for Exit Strategy

Benefits to Both Merger Candidates

  • Mergers are easier and less expensive from a legal perspective
  • May be a Tax-Free Transaction for both Parties
  • Ability to Attract Larger or Different Clients
  • Attract Superior Staff with Larger Firm
  • Enjoy more professional opportunities and resources
  • Increased profit for both parties due to economies of scale
  • No cash required by either party, except brokerage and/or legal fees
  • Built-in Exit Strategy
  • Quickest and least-expensive expansion strategy

Mergers Solve Common Infrastructure Problems

  • Rainmakers – This limited resource is difficult to replace but essential in a market characterized by fierce competition for clients
  • Technicians – Whether entering a new market or expanding existing services, good technicians are always a valuable asset
  • Quality Control – Top firms are always looking to improve quality control and thereby their competitive edge.
  • Management & Administration – Many mid-size firms suffer from a lack of management and administrative infrastructure. Merging can provide a viable solution.
  • Excess Capacity – Many firms suffer from excess capacity outside of tax season. Merging with a firm that provides year round cash flow is a common motivation.

Structuring Creative Transactions

Mergers lend themselves to creative transactions that can lead to a win/win for both firms. Some of the important issues are listed below. Perhaps most surprising, is that mergers usually include the potential for a larger compensation package for the smaller firms’ partners, while a larger buy-out for the larger firm’s partners.

  • Keeping their own PA or Not
  • How each Partner’s Book will be handled
  • How will Growth and New Leads be handled
  • Billable vs. Non-Billable Hours
  • Responsibilities
  • Voting Rights
  • Salaries
  • Distributions
  • Benefits
  • Allocation of Equity/Profits
  • Capital Contributions
  • Who will be Managing Partner
  • New Firm Name
  • Location(s)
  • Settling Disputes
  • Outside Commitments
  • De-merger Agreement
  • Expulsion, Death or Disability of Partners
  • How New Partners will be Handled
  • Exit Strategy: Price and Terms upon Retirement

Call us directly, or our Live Chat line, to discuss your merger questions and/or objectives.