Accounting Practice Sales: 4 Things to Know
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If you’re looking to grow an existing CPA firm or start a start a new consulting endeavor, finding an accounting business for sale could be a great path. Accounting practice sales can jumpstart a new business by taking over existing clients. Here are four things to know about accounting practice sales.
What is included in the sale of an accounting practice?
Most small accounting practices for sale include the sale of many aspects of the business, including the brand and client list. Some sales also involve physical office space. Accounting practice sales typically occur when a CPA is retiring or moving to another state and leaving the business behind. Purchasing an accounting practice is a great way to expand an existing brand or to move to a new geographic area or new type of clientele. Many people choose to purchase an existing CPA firm if they want to add to their current business or try something new, such as purchasing a practice focused on taxes or audits. Once the transaction is finalized, the buyer owns the entire practice, which can limit the contact the seller has with past clients. When finalizing the deal, both parties should agree to the specifics of what happens to existing clients.
How is the sale price determined?
The price of an accounting practice is based on its size and value. A large, profitable firm will typically have a higher cost than a smaller firm with less revenue. However, there are other considerations that go into the price including value of the client list, location, and financing options. Like all real estate and business transactions, the price is negotiable, but it is at the seller’s discretion if any other offers will be considered.
Can an accounting practice be financed?
When buying an accounting practice, consider how much cash you can put down up front. Most sales go through with around a 10% down payment, but that varies depending on the buyer and seller. The brokers can arrange a financing plan with all parties in agreement.
Who manages the sale?
The accounting practice sales process can be very involved because of the multiple parties and considerations involved. For this reason, most people choose to work through an accounting practice broker, like Pro Horizons, who is experienced in the field. When choosing a broker, look for a company with a deep understanding of the industry and with experience creating strong deals. Choosing the right broker can remove much of the stress of purchasing a CPA firm and make the process run much more smoothly.
Selling and buying an accounting practice is a big decision and requires plenty of time and paperwork. Understanding the process and getting the right people on the team can make a big difference in creating a smoother transaction.
Pro Horizons: Experts in Accounting Practice Sales
If you are looking to either sell or buy an accounting firm, consider the help of Pro Horizons, a trusted Broker who can help with every step of the process. Contact us today to discover how we can make the transition as smooth as possible.
Why Look at Accounting Firms for Sale?
Owning and operating an accounting firm is the dream of many CPAs and business professionals. When you own the practice, you are in charge of making the decisions and can turn the firm into whatever you want it to be. Many people choose to start their own accounting firms, but one of the best ways to become an accounting firm owner is to buy an existing firm. Accounting practice sales allow people to purchase proven accounting firms and speed up their path to firm ownership and growth.
Five Benefits of Buying Accounting Firms
There are numerous benefits to buying an accounting firm over starting one from the ground up. Here are five of the main benefits to consider:
- Established client relationships. Accounting clients tend to be very loyal, which means that even when an accounting firm changes owners, they will likely stay with the firm. When you purchase an existing firm, you likely will have a long list of clients who are already established with the firm, which is a huge advantage over having to attract potential clients from scratch. Without established client relationships, you’ll likely spend the bulk of your time trying to find new clients and bring them to your firm, which is not only tedious but also expensive and time-consuming and can pull you away from focusing on other aspects of the business. Established client relationships that come from purchasing an accounting firm allow you to skip over the step of finding new clients before you can do business.
- Quick growth. It often takes time for a new accounting firm to get off the ground and start to grow. When you start from scratch, you have to find an office space, hire staff, create a brand, and find clients before you can start to grow. All of those steps can take time and money. But when you purchase a firm, the initial tasks have already been done, so you can simply buy the firm and smoothly transition everything over for quick growth without skipping a beat. The groundwork is already laid for you to take the business to the next level.
- Less financial risk. During the buying process, you’ll be able to see the financial history of the accounting firm you are purchasing, which will give you the full picture of how the business performs and how it has grown. That information can give you a realistic idea of how the firm can grow and what you can expect to get back on your investment. Starting a firm from scratch comes with huge financial risk because you don’t know if it will be successful. But purchasing an established firm lessens the risk because you can see that the firm is already successful and that the success is likely to continue. The firm’s history can provide an accurate prediction of expenses and revenue so you know exactly what you’re getting with less financial risk.
- Trained staff. Finding, hiring, and training staff is a long and expensive process, especially when you have to fill an entire accounting firm at once. Starting a new accounting firm comes with the struggle of finding the right employees and taking a risk that the people you are choosing will help the firm grow. When you purchase a firm, you also often take over the staff. Having employees who are trained and experienced is a huge advantage because it helps the transition between owners go much more smoothly and allows service to customers to continue seamlessly. Trained staff can also help you as the new owner understand how the firm operates and what it takes the be successful in the area. You don’t have to spend time and resources finding and training staff because you already have a trained staff ready to work.
- Known brand. To be successful, your accounting firm must have a brand. What services do you offer? What makes your firm different from others? How do you serve customers? Building and marketing a brand from the ground up can take time and resources, especially if you have to bring in marketing consultants to help with the process. An established accounting firm comes with a known brand. Because it has been around for a while, it is likely known in the community and has a reputation. People know what services the firm offers and what makes it different from other accounting firms. A known brand also leads to word-of-mouth marketing from past and current clients, which is a huge advantage. Instead of spending time building and sharing your brand, you can walk into a firm that is already known in the community.