Jessica Veiga
There are lots of reasons why a CPA firm might be ready for acquisition. Business climate changes, firm growth, or partners reaching retirement age are some of the most common.
Regardless of why you're interested in getting your CPA firm acquired, it's important to understand that the process can look different depending on your level of preparedness. This article will cover eight tips to help you prepare your firm for acquisition.
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How Do I Get My CPA Firm Acquired?
For many firms, acquisition is a last-ditch effort to keep their firm alive, and they don’t anticipate it becoming a reality for quite some time (hopefully). But given the state of the world and our economic outlook, we might see more and more CPA firm acquisitions over the next few months and into the new year. Here’s what you need to know to make it happen and save your firm’s name.
- Focus on Good Staff
- Avoid Delays and Work With Urgency
- Avoid or Solve Culture and Ego Clashes
- Make It Easy to Understand Your Firm's Culture
- Start Getting Comfy With Good Tech
- Try to Make Sure Your Firm Serves Unique Niches
- Don't Cause Problems With the Process
- Handle Financial Considerations Beforehand
Here's an easy one!
If buyers see a great staff that's ready to work and move forward in innovative new ways, that factor could end up making the buying decision for them. It's tough to find teams that are fully-trained, ready to learn more, and happy to serve clients. If you can keep your staff skilled, happy, and effective, it might help you achieve that merger or acquisition you've been waiting for.
Delays in the mergers & acquisitions (M&A) process are never fun—and they usually spiral into even longer delays, too. You should avoid delays at all cost and work with urgency when you approach purchasing time.
- Accomplish as much as you can within the first couple of meetings between your firm and the purchaser.
Time kills deals. You need to smooth out the specifics and legalities of your situation to help make everyone comfortable and clarify which steps you should take going forward.
Culture and ego clashes are never fun—we can all probably remember them ruining entire friendships and classes in our elementary school days. How well do you think these problems play out on a large scale? If someone were to try to acquire your firm, what do you think they'd feel if they were constantly running up against culture and ego issues?
It's important to maintain a stable firm culture and communicate what that culture is clearly during the buying process. Ideally, no one should get too caught up in their own ego for their own good. We all get along best when we work in tandem—bring that idea into your firm and your acquisition.
If you want to avoid and solve culture problems (as mentioned above), you should put in some work to make sure your firm's culture is crystal clear. Your CPA firm is more likely to be acquired if you provide potential buyers with a vision of:
- What it's like to be a partner or owner at the firm;
- What it's like to be a member of staff at the firm;
- What it's like to be a client of the firm.
All of these concepts can have their own cultures attached to them. Staff culture, for example, encompasses everything from how long (and hard) staff are expected to work to office infrastructure and travel details.
When you offer insight into your firm's culture, acquisition becomes more real—and it's more likely to happen smoothly, too.
Innovative technology is one of the most evident ways to "beautify" your firm before you shoot for acquisition. However, some of that technology can run up big bills, but there are lots of beneficial pieces of tech that are affordable, too.
If you aren't sure where to start your tech makeover, consider:
- Is your firm already on the cloud? Do you use client portals and other similar tools?
- Will it take a buyer a lot of time and money to bring your firm up to technological speed?
- Does your firm's culture skew toward or away from embracing new tech? The more open and excited your staff are, the better.
Lots of traditional accounting services will be replaced (or are being replaced) with technology. If your firm serves some unique niches, it helps you stand out and positions you well for the future.
Buyers are interested in firms that are on the cutting-edge of the accounting sphere. The more you have to offer and the more that sets you apart from the competition, the higher your likelihood of being acquired.
Remember how we said to get as much sorted within your first few meetings with a buyer as possible? Remember that ego clashes are a huge no-no?
Those are roadblocks. You might encounter a lot more during acquisition, too. Your best bet is to try to avoid causing problems and confusion during this process.
- Adversarial nature of the deal: It's easy to want the best for each party in an acquisition, but the longer it takes, the more likely you are to start focusing more on individual goals and misaligning the process.
- Unintended messaging: Sometimes we say the wrong things—and sometimes we fail to say the right ones. Try to never take too long to communicate with potential buyers; think about your messages before you send them to make sure they aren't saying something you don't mean.
- Inappropriate term demands: If people start asking for things that make no sense, it's going to cause problems, and it's going to lengthen the amount of time it takes to get your firm acquired, too. Don't bring up demands during final contract negotiations, and don't overstep your boundaries.
There's no use in getting into talks with a buyer only to stumble when you're not sure about money. Consider:
- Your available time and your goals:
- What's your time frame?
- What are your business goals and objectives?
- How long will transitioning to a new owner take?
- What’s your readiness for succession planning?
- Financial considerations:
- Are you where you need to be (financially) to exit?
- Do you need other capital?
- Do you know your firm’s worth?
- Getting ready for a sale:
- Does the owner drive the business? Or does the business drive the owner?
- Is your service pricing appropriate?
- Do you have processes in place to support day-to-day operations?
Get Your Ducks In a Row & Look As Appealing As Possible to Buyers
While we’ve covered a good amount in this blog post and pointed out some helpful dos and don’ts, there’s no golden ticket to acquisition. It takes a lot of consideration, planning, and negotiation before a good deal is finalized. But if you’re sure of your decision to seek acquisition and put in the effort as described here, you’ll be in good shape and look attractive to buyers.
An extra note on how to make your firm even more attractive—and ensure a smooth transition—take an extra moment to consider your technology. Botkeeper is the platform to bring into your CPA firm if you're trying to get acquired. We help firms look more attractive for M&As, and our team of experts works with clients to assess:
- Margins;
- Resource allocation;
- Overall operating costs;
- The need for new advisory services;
- And more.
If you're prepared to change direction and get acquired, Botkeeper can help. We offer the automated bookkeeping component that will further your steps in the right direction. Reach out to talk with us today and find out more about our suite of offerings.
