Accounting Practices For Sale
Firstly, with such an imbalance of supply and demand you need to lower your expectations. Don’t expect to find a practice in a month and be sitting in front of a whole new batch of clients by June 30 next year. It rarely happens like that and you need to recognise the buying process takes time. There are initial meetings, detailed reviews, negotiation and settlement to contend with before the real hard work begins, transitioning the staff and clients!
You may also need to compromise on the type of firm you are looking to buy. Your ideal practice is probably full of SMSF work and larger clients who are paying premium rates for consulting work. The reality is most suburban practices are ‘generalists’ with a mixed bag of individuals, SME’s, SMSF’s and general tax compliance and consulting work. With the scarcity of practices on the market you might need to lower your sights.
The scarcity of stock also means you shouldn’t be in a hurry to buy and you certainly need to plan the process. Due diligence is quite a process and it means knowing the future maintainable fees of the practice, the profitability, the age and profile of the top 20 or 30 client groups and what the vendor is offering as part of the handover. You also need to understand the role of each staff member and their history and productivity. If you are going to part with several hundred thousand dollars make sure you know what you are buying because a purchase in haste could prove to be a very expensive mistake.
Finally, on the finance issue, make sure you have pre-approval in place before you start the search. Too often buyers miss a practice that is sold under their nose while they are still waiting for bank approval. We all expect the baby boomer principals and partners to retire and sell over the next 3 years so planning and patience are the key.