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CPA Firm Mergers & Acquisitions: How to Buy a Firm, How to Sell a Firm, and How to Make the Best Deal

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    Non-Member: $59.00

Chances are you’re looking to buy, sell, or merge your CPA firm. Owners at firms of all sizes are seeking solutions to fund retirements or grow their practices. And, CPA firm M&A activity is only going to increase in the coming years—new deals are announced almost daily.

Fortunately, there are steps you can take right now to position you and your firm for success. Written with both buyers and sellers in mind, this comprehensive resource aims to ensure that both parties to a transaction achieve their goals.

Authors and transition experts Joel Sinkin and Terrence Putney demonstrate that it is possible to arrive at a reasonable deal where retiring partners are paid a satisfying price for the practice they’ve built, remaining partners make more than they did before, and new owners take on a practice that is poised for continuing success and potential growth.

Sinkin and Putney share their best advice on how to:

  • Determine your firm’s value,
  • Get to know your potential partner in a deal,
  • Select a successor your clients will love,
  • Structure alternative deals,
  • Avoid roadblocks,
  • Prepare a practice continuation agreement,
  • Perform due diligence,
  • Execute a win-win deal, and
  • Time and plan for your transition.

Each chapter concludes with an Action Agenda to help spur your planning. Plus, it includes a collection of practical tools to assist you through the process of buying, selling, or merging, including practice summary tools, an annual succession planning checklist, sample practice continuation agreement, sample client announcements, due diligence tools, and sample transition letters.

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Excerpt

Think about the Four Cs

When building your transition plan, it’s fairly easy to recognize skill sets and experience that must be replaced, but we also place a lot of emphasis on what we call the 4 Cs. Both buyers and sellers should be aware of their potential impact on any deal.

Chemistry

If you do not want to eat lunch with the person or people with whom you are considering affiliating, don’t affiliate with them. This is the single most critical advice we give anyone. It is particularly important in an external succession, but even in an internal succession the incoming and outgoing people should like each other.

Capacity

If you and other partners or even staff will be slowing down in the near future, does the successor firm have the capacity to take on the work load of the professional slowing down as well as the expertise to replace their role? If they don’t have the full capacity in place, do they have a credible plan and a commitment to acquire it? For instance, if someone in your firm who must be replaced is a major producer of billable hours, the acquiring firm would have to be overstaffed (not a good indication of a well-run firm) to replace those hours without hiring anyone. Does the firm appear to have the systems in place to hire people when needed? Who will be taking over managing your clients? The acquiring firm should at least have a plan for that important role and a commitment you can rely on to execute it. The plan could involve promoting a manager to partner to create more partner-level capacity or, if special expertise is required, hiring someone from the outside.

Culture

A firm’s culture is central to how it defines itself, but there are many ways to do that. The term generally refers to the firm’s environment and philosophy. When some firms think about “culture,” they are talking about how clients are serviced, billed, or communicated with. In other cases, it is about what might be called client ownership, and whether the firm has an “eat what you kill” or book-of-business mentality as compared to a one-firm philosophy. In other cases, it means having either an open or closed compensation program for partners. Some firms define themselves by their work-life integration policies or their use of cutting edge technologies. No matter what definitions are used, it can be tough to merge two conflicting cultures or ones that have little in common and little interest in change. If that can’t be achieved, once again the practice is risking client or staff losses.

Continuity

Change is challenging for anyone going through a merger or acquisition. Partners, staff and clients traditionally seek to avoid it. Keep in mind that if your clients have stuck with you, they apparently like the way you are servicing them or they would have complained and gone elsewhere. If your successor requires wholesale changes that will be visible to or have an impact on clients, there may be immediate client defections.

System Requirements

About the Authors

Joel L. Sinkin

Joel Sinkin has been involved with and consulted on 900+ transaction closings of accounting firms since 1990 and was named one of the Top 100 Most Influential People in Accounting in 2012, 2013, 2014, 2015, 2016 and 2017 by Accounting Today. He teaches CPE courses and lectures for the American Institute of CPAs, national associations and state societies. He is also frequently quoted in trade magazines, has authored many articles and most recently co-wrote "CPA Firm Mergers & Acquisitions: How to Buy a Firm, How to Sell a Firm, and How to Make the Best Deal" published by the AICPA. In his more than two decades in the M&A arena, Joel has worked with thousands of firms including start-ups, sole proprietors, local, regional, and national firms.

Terrence E. Putney, CPA

Terry has more than 39 years of experience in the CPA profession. For six years, he served as Managing Director - Mergers & Acquisitions for RSM McGladrey (now RSM US), the country’s fifth-largest accounting firm and held several executive posts with its then corporate parent, H&R Block. At RSM McGladrey, he structured and negotiated several dozen deals resulting in the acquisition of accounting and consulting firms ranging in size from sole proprietors to multi-state firms with hundreds of staff and professionals. Prior to joining RSM McGladrey, he served as Managing Partner of Donnelly Meiners Jordan Kline, a 60-person CPA firm in Kansas City. Terry is a member of the CPA Consultants' Alliance, a CPA licensed in Missouri, and a member of the Kansas University Accounting and Information Systems Advisory Council. He is a frequent speaker and author to the accounting profession. Terry is a co-founder of Transition Advisors and has been providing consulting to CPA firms since 2004.

About the Publisher

American Institute of CPAs

The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 418,000 members in 143 countries, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, and offers specialized credentials for qualified professionals who concentrate on personal financial planning; forensic accounting; business valuation; and information management and technology assurance. With The Chartered Institute of Management Accountants (CIMA), it offers the Chartered Global Management Accountant (CGMA) designation, which sets the global benchmark for quality and recognition in management accounting.

The AICPA and CIMA also make up the Association of International Certified Professional Accountants (the Association), which represents public and management accounting globally, advocating on behalf the public interest and advancing the quality, competency and employability of CPAs, CGMAs and other accounting and finance professionals worldwide.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and Ewing, NJ.