3 Steps to Increase Your Value Before an Accounting Practice Sale

Whether it’s after next tax season, or five years from now, there are some simple steps you can take to make your practice more valuable to potential buyers…and you.  Over the years, I’ve looked at a lot of practices and there are common threads through most of them that keep the eventual price paid less than spectacular. The rules are simple, and, despite what you think current market conditions are, will help you to take away more money in a sale or merger.

First, raise your fees. I know: “The economy sucks.” “My clients are suffering.” “I’m already at the peak of the local billing scale.” Except for that last one, I’ve heard the others before. At the end of the day, you’re in business to make money, not to support your clients through reduced fees.  Let’s say you’re doing $200,000 per year and you raise your fees 10%. That immediately drops $20,000 to your bottom line. I know, I know, you’ll lose some clients. Let’s say you lose $20,000 in fees. Doesn’t that put you in exactly the same position you were before, except that now you have more time to do other things? At a hundred bucks an hour, you now have 200 more hours to play golf, smell the roses, or whatever. Long story short, increase your fees to current market rates and you’ll demand more of a higher price for your practice. You’ll also make more money in your practice.

Second, get rid of the dead weight. That means “D” clients. You know who they are. The ones that will probably go away if you do raise your rates (see above) and the ones that are more trouble than they’re worth.  You’ll be left with the more loyal and premium clients. You’ll have a practice that is a lot easier to sell and get a higher price for. That dead weight can also apply to personnel. I’ve also seen the practitioner that just can’t bring herself to let Good Old Joe go, even though Joe hasn’t pulled his weight around the firm in a long time. Do yourself a favor and let Joe go (probably after tax season, though).  Both of these “triages” will garner you more money for your practice when you sell.

Third, it’s the 21st century. That means bringing your practice up to date. Don’t be “pennywise and pound foolish”. You may not be totally paperless, but you should be working toward that goal. If you’re still doing your write-up work in 13-column ledger books, there’s probably no hope for you. You should be scanning documents and utilizing the newer software suites that are out there. If you’re upgrading on a regular basis, then the learning curve won’t be so steep.

So, these are the three simple fixes over which you have control (location, probably the biggest single factor, you can’t control).  These are the areas where can you implement short term changes that will maximize the value of your practice.

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