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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.

From Blog

  • All Cash Transactions – A Boom or Bust??
    All Cash Transactions – A Boom or Bust?? Many of our competitors promise their clients all cash deals. But we have found that those are the worst M&A transactions for long-term success, for both parties.  If the Seller gets all cash at closing then he/she has no incentive to carefully

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Get The Complete Guide To Mergers & Acquisitions of CPA Firms
* Acquisition Strategies
* Valuation of CPA & Accounting Firms
* Practice Presentation
* Compatibility & Risk
* Economies Of Scale & Financing
* Letters Of Intent
* Due Diligence
* Legal Documents
* Closing Requirements
* A Smooth Transition