There are many items to evaluate when pursuing the acquisition of a tax and accounting practice: location, revenue, types of service, types of clients, profitability, and staff among others. Following are some key considerations we feel are often overlooked:

1. Be Honest with Yourself… too often we hear about buyers who take on more than they can handle and really struggle.

2. Fit… finding a practice that is a good fit is by far the first and best step in minimizing your risk.

3. Review Historical Data… it is surprising to us how many sales in the market are being priced on projections. Be sure you review the past three years of financials when evaluating an
acquisition and establishing any offer.

4. Economics… be smart in evaluating the economics of any transaction. There are rules to recasting financials and many practitioners, even some
brokers, do not know them. So, rely on your effort to identify the Seller’s Discretionary Earnings and then adjust for debt service, your income requirement, and other anticipated expenses.

5. Bank Financing… it is out there and readily available. It benefits you in two ways: it improves your offer to any seller and it improves your cash flow with amortization at least twice as long as most sellers will offer.

6. Due Diligence… do it and do it thoroughly. Do not rely on the terms of your transaction to cover a haphazard review effort. Identify all you wish to review, document it, and let the seller organize it so it is an efficient, timely, and thorough process.

7. Transition… combined with fit, this is the most important step in retaining clients as the ownership and relationships are transferred. It is important that there is a plan by the time the transaction closes and that there is no ambiguity about next steps and who is responsible for implementing them.

8. Put Yourself in the Other Party’s Shoes… having the ability to see the transaction from the seller’s perspective is
crucial when trying to arrive at a sale that works for both parties.

There is no doubt in our experience that putting some thought and effort into each consideration above will result in a much more successful acquisition.

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