Accounting & Auditing

By Ira Rosenbloom, CPA (Inactive)  

The mergers and acquisition (M&A) market for accounting firms is crowded right now with owners looking to sell their practices and retire.

According to firms polled in the Rosenberg 2022 Practice Management Survey, 25% of firms making more than $2 million a year have partners over the age of 60. For firms making less than $2 million, that number jumps to 42%. The survey also notes that one out of four accounting firm partners are near or past their mandatory retirement age provisions.

In addition, the percentage of multipartner firms that expect to make an acquisition in the next three years ranges from 23% to 73%, depending on revenue. Generally, the percentage rises as firm size increases.

The data starts to paint a picture of older firm owners looking to get out. Even though many firms may be in the market to acquire, it’s also harder than ever to become an attractive, and valued, practice.

So, what’s a firm owner of the baby boom generation to do given the circumstances? Here are seven recommendations to optimize results when making a deal in a buyers’ market.  

Be Flexible with Valuations and Deal Terms  

Think about how to package the elements of your practice to be most exciting to your target buyer. For instance, you may think a high number of top-tier clients will bring high value, but a buyer might spy future risk if these clients aren’t retained. Explore how you can build engagement benchmarks into the deal so buyers will be more comfortable with client retention. You might have a lot of Form 1040 tax clients, but a buyer won’t be as interested if client fees are all in a lower range.  

Invest in a Coach  

Retiring owners not only must make a good first impression, they also need to be at the top of their game in each subsequent meeting. Work with a communications coach so you articulate your information tactically and are prepared for curve balls. Knowing your metrics will be key, but how you position them is equally important. Make sure calls are timely and emails are polished.  

Clean Up Your Client Base  

If you will eventually be looking to market your firm for sale, the time is now to either eliminate engagements that are poor performers or create improvements that boost your performance metrics. No one wants a fixer-upper in a hot M&A buyers’ market.  

Explore a Serial Transaction  

Consider a deal in which an acquirer takes on a financial percentage now, with the balance transferred over a mutually agreed upon timeframe. A serial transition can help a potential successor who may be juggling their own staffing, financial, or other issues, making you a more attractive partner.  

Quantify Upside Potential for the Buyer  

You know your firm and clients. Estimate the growth you can reasonably expect once you have merged with another firm. If the acquiring firm has additional skills and service expertise that will be beneficial to your existing clients, figure out that value and be ready to communicate that to the next owner.  

Incentivize Performance in the Compensation Structure

By including performance-based goals into your compensation plan, you will make it clear that you are a true partner looking for everyone to benefit from the deal. You might also consider deferring parts of your compensation package to a later date. Being creative and realistic can be a game-changer to closing the best deals.

Sweeten the Pot for Staff to Stay  

A buyer will want a realistic idea of how many team members will remain after a merger. Create an incentive plan before the merger that is attractive to team members and the buyer. For instance, offering a bonus for staying with the firm can be supplemented with proceeds from the sale.  

It may go without saying, but be ready to work with select clients on a limited basis during the buy-out period to maintain their retention. Also, try to start the succession planning process many years before you actually want to sell. As you prepare, be aware of the marketplace and your firm’s competitive advantages. At the same time, don’t be too aggressive or grandiose. That may be read as desperation.  

Planning, flexibility, and understanding the market will be key to your success as a seller in today’s M&A market.  

Ira S. Rosenbloom, CPA (inactive), is chief operating executive at Optimum Strategies in Spring House, Pa., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at ira@optimumstrategies.com.  

Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.  

Ethics

By Ira Rosenbloom, CPA (Inactive)  

The mergers and acquisition (M&A) market for accounting firms is crowded right now with owners looking to sell their practices and retire.

According to firms polled in the Rosenberg 2022 Practice Management Survey, 25% of firms making more than $2 million a year have partners over the age of 60. For firms making less than $2 million, that number jumps to 42%. The survey also notes that one out of four accounting firm partners are near or past their mandatory retirement age provisions.

In addition, the percentage of multipartner firms that expect to make an acquisition in the next three years ranges from 23% to 73%, depending on revenue. Generally, the percentage rises as firm size increases.

The data starts to paint a picture of older firm owners looking to get out. Even though many firms may be in the market to acquire, it’s also harder than ever to become an attractive, and valued, practice.

So, what’s a firm owner of the baby boom generation to do given the circumstances? Here are seven recommendations to optimize results when making a deal in a buyers’ market.  

Be Flexible with Valuations and Deal Terms  

Think about how to package the elements of your practice to be most exciting to your target buyer. For instance, you may think a high number of top-tier clients will bring high value, but a buyer might spy future risk if these clients aren’t retained. Explore how you can build engagement benchmarks into the deal so buyers will be more comfortable with client retention. You might have a lot of Form 1040 tax clients, but a buyer won’t be as interested if client fees are all in a lower range.  

Invest in a Coach  

Retiring owners not only must make a good first impression, they also need to be at the top of their game in each subsequent meeting. Work with a communications coach so you articulate your information tactically and are prepared for curve balls. Knowing your metrics will be key, but how you position them is equally important. Make sure calls are timely and emails are polished.  

Clean Up Your Client Base  

If you will eventually be looking to market your firm for sale, the time is now to either eliminate engagements that are poor performers or create improvements that boost your performance metrics. No one wants a fixer-upper in a hot M&A buyers’ market.  

Explore a Serial Transaction  

Consider a deal in which an acquirer takes on a financial percentage now, with the balance transferred over a mutually agreed upon timeframe. A serial transition can help a potential successor who may be juggling their own staffing, financial, or other issues, making you a more attractive partner.  

Quantify Upside Potential for the Buyer  

You know your firm and clients. Estimate the growth you can reasonably expect once you have merged with another firm. If the acquiring firm has additional skills and service expertise that will be beneficial to your existing clients, figure out that value and be ready to communicate that to the next owner.  

Incentivize Performance in the Compensation Structure

By including performance-based goals into your compensation plan, you will make it clear that you are a true partner looking for everyone to benefit from the deal. You might also consider deferring parts of your compensation package to a later date. Being creative and realistic can be a game-changer to closing the best deals.

Sweeten the Pot for Staff to Stay  

A buyer will want a realistic idea of how many team members will remain after a merger. Create an incentive plan before the merger that is attractive to team members and the buyer. For instance, offering a bonus for staying with the firm can be supplemented with proceeds from the sale.  

It may go without saying, but be ready to work with select clients on a limited basis during the buy-out period to maintain their retention. Also, try to start the succession planning process many years before you actually want to sell. As you prepare, be aware of the marketplace and your firm’s competitive advantages. At the same time, don’t be too aggressive or grandiose. That may be read as desperation.  

Planning, flexibility, and understanding the market will be key to your success as a seller in today’s M&A market.  

Ira S. Rosenbloom, CPA (inactive), is chief operating executive at Optimum Strategies in Spring House, Pa., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at ira@optimumstrategies.com.  

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Leadership

By Ira Rosenbloom, CPA (Inactive)  

The mergers and acquisition (M&A) market for accounting firms is crowded right now with owners looking to sell their practices and retire.

According to firms polled in the Rosenberg 2022 Practice Management Survey, 25% of firms making more than $2 million a year have partners over the age of 60. For firms making less than $2 million, that number jumps to 42%. The survey also notes that one out of four accounting firm partners are near or past their mandatory retirement age provisions.

In addition, the percentage of multipartner firms that expect to make an acquisition in the next three years ranges from 23% to 73%, depending on revenue. Generally, the percentage rises as firm size increases.

The data starts to paint a picture of older firm owners looking to get out. Even though many firms may be in the market to acquire, it’s also harder than ever to become an attractive, and valued, practice.

So, what’s a firm owner of the baby boom generation to do given the circumstances? Here are seven recommendations to optimize results when making a deal in a buyers’ market.  

Be Flexible with Valuations and Deal Terms  

Think about how to package the elements of your practice to be most exciting to your target buyer. For instance, you may think a high number of top-tier clients will bring high value, but a buyer might spy future risk if these clients aren’t retained. Explore how you can build engagement benchmarks into the deal so buyers will be more comfortable with client retention. You might have a lot of Form 1040 tax clients, but a buyer won’t be as interested if client fees are all in a lower range.  

Invest in a Coach  

Retiring owners not only must make a good first impression, they also need to be at the top of their game in each subsequent meeting. Work with a communications coach so you articulate your information tactically and are prepared for curve balls. Knowing your metrics will be key, but how you position them is equally important. Make sure calls are timely and emails are polished.  

Clean Up Your Client Base  

If you will eventually be looking to market your firm for sale, the time is now to either eliminate engagements that are poor performers or create improvements that boost your performance metrics. No one wants a fixer-upper in a hot M&A buyers’ market.  

Explore a Serial Transaction  

Consider a deal in which an acquirer takes on a financial percentage now, with the balance transferred over a mutually agreed upon timeframe. A serial transition can help a potential successor who may be juggling their own staffing, financial, or other issues, making you a more attractive partner.  

Quantify Upside Potential for the Buyer  

You know your firm and clients. Estimate the growth you can reasonably expect once you have merged with another firm. If the acquiring firm has additional skills and service expertise that will be beneficial to your existing clients, figure out that value and be ready to communicate that to the next owner.  

Incentivize Performance in the Compensation Structure

By including performance-based goals into your compensation plan, you will make it clear that you are a true partner looking for everyone to benefit from the deal. You might also consider deferring parts of your compensation package to a later date. Being creative and realistic can be a game-changer to closing the best deals.

Sweeten the Pot for Staff to Stay  

A buyer will want a realistic idea of how many team members will remain after a merger. Create an incentive plan before the merger that is attractive to team members and the buyer. For instance, offering a bonus for staying with the firm can be supplemented with proceeds from the sale.  

It may go without saying, but be ready to work with select clients on a limited basis during the buy-out period to maintain their retention. Also, try to start the succession planning process many years before you actually want to sell. As you prepare, be aware of the marketplace and your firm’s competitive advantages. At the same time, don’t be too aggressive or grandiose. That may be read as desperation.  

Planning, flexibility, and understanding the market will be key to your success as a seller in today’s M&A market.  

Ira S. Rosenbloom, CPA (inactive), is chief operating executive at Optimum Strategies in Spring House, Pa., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at ira@optimumstrategies.com.  

Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.  

Practice Management

By Ira Rosenbloom, CPA (Inactive)  

The mergers and acquisition (M&A) market for accounting firms is crowded right now with owners looking to sell their practices and retire.

According to firms polled in the Rosenberg 2022 Practice Management Survey, 25% of firms making more than $2 million a year have partners over the age of 60. For firms making less than $2 million, that number jumps to 42%. The survey also notes that one out of four accounting firm partners are near or past their mandatory retirement age provisions.

In addition, the percentage of multipartner firms that expect to make an acquisition in the next three years ranges from 23% to 73%, depending on revenue. Generally, the percentage rises as firm size increases.

The data starts to paint a picture of older firm owners looking to get out. Even though many firms may be in the market to acquire, it’s also harder than ever to become an attractive, and valued, practice.

So, what’s a firm owner of the baby boom generation to do given the circumstances? Here are seven recommendations to optimize results when making a deal in a buyers’ market.  

Be Flexible with Valuations and Deal Terms  

Think about how to package the elements of your practice to be most exciting to your target buyer. For instance, you may think a high number of top-tier clients will bring high value, but a buyer might spy future risk if these clients aren’t retained. Explore how you can build engagement benchmarks into the deal so buyers will be more comfortable with client retention. You might have a lot of Form 1040 tax clients, but a buyer won’t be as interested if client fees are all in a lower range.  

Invest in a Coach  

Retiring owners not only must make a good first impression, they also need to be at the top of their game in each subsequent meeting. Work with a communications coach so you articulate your information tactically and are prepared for curve balls. Knowing your metrics will be key, but how you position them is equally important. Make sure calls are timely and emails are polished.  

Clean Up Your Client Base  

If you will eventually be looking to market your firm for sale, the time is now to either eliminate engagements that are poor performers or create improvements that boost your performance metrics. No one wants a fixer-upper in a hot M&A buyers’ market.  

Explore a Serial Transaction  

Consider a deal in which an acquirer takes on a financial percentage now, with the balance transferred over a mutually agreed upon timeframe. A serial transition can help a potential successor who may be juggling their own staffing, financial, or other issues, making you a more attractive partner.  

Quantify Upside Potential for the Buyer  

You know your firm and clients. Estimate the growth you can reasonably expect once you have merged with another firm. If the acquiring firm has additional skills and service expertise that will be beneficial to your existing clients, figure out that value and be ready to communicate that to the next owner.  

Incentivize Performance in the Compensation Structure

By including performance-based goals into your compensation plan, you will make it clear that you are a true partner looking for everyone to benefit from the deal. You might also consider deferring parts of your compensation package to a later date. Being creative and realistic can be a game-changer to closing the best deals.

Sweeten the Pot for Staff to Stay  

A buyer will want a realistic idea of how many team members will remain after a merger. Create an incentive plan before the merger that is attractive to team members and the buyer. For instance, offering a bonus for staying with the firm can be supplemented with proceeds from the sale.  

It may go without saying, but be ready to work with select clients on a limited basis during the buy-out period to maintain their retention. Also, try to start the succession planning process many years before you actually want to sell. As you prepare, be aware of the marketplace and your firm’s competitive advantages. At the same time, don’t be too aggressive or grandiose. That may be read as desperation.  

Planning, flexibility, and understanding the market will be key to your success as a seller in today’s M&A market.  

Ira S. Rosenbloom, CPA (inactive), is chief operating executive at Optimum Strategies in Spring House, Pa., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at ira@optimumstrategies.com.  

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Technology

By Ira Rosenbloom, CPA (Inactive)  

The mergers and acquisition (M&A) market for accounting firms is crowded right now with owners looking to sell their practices and retire.

According to firms polled in the Rosenberg 2022 Practice Management Survey, 25% of firms making more than $2 million a year have partners over the age of 60. For firms making less than $2 million, that number jumps to 42%. The survey also notes that one out of four accounting firm partners are near or past their mandatory retirement age provisions.

In addition, the percentage of multipartner firms that expect to make an acquisition in the next three years ranges from 23% to 73%, depending on revenue. Generally, the percentage rises as firm size increases.

The data starts to paint a picture of older firm owners looking to get out. Even though many firms may be in the market to acquire, it’s also harder than ever to become an attractive, and valued, practice.

So, what’s a firm owner of the baby boom generation to do given the circumstances? Here are seven recommendations to optimize results when making a deal in a buyers’ market.  

Be Flexible with Valuations and Deal Terms  

Think about how to package the elements of your practice to be most exciting to your target buyer. For instance, you may think a high number of top-tier clients will bring high value, but a buyer might spy future risk if these clients aren’t retained. Explore how you can build engagement benchmarks into the deal so buyers will be more comfortable with client retention. You might have a lot of Form 1040 tax clients, but a buyer won’t be as interested if client fees are all in a lower range.  

Invest in a Coach  

Retiring owners not only must make a good first impression, they also need to be at the top of their game in each subsequent meeting. Work with a communications coach so you articulate your information tactically and are prepared for curve balls. Knowing your metrics will be key, but how you position them is equally important. Make sure calls are timely and emails are polished.  

Clean Up Your Client Base  

If you will eventually be looking to market your firm for sale, the time is now to either eliminate engagements that are poor performers or create improvements that boost your performance metrics. No one wants a fixer-upper in a hot M&A buyers’ market.  

Explore a Serial Transaction  

Consider a deal in which an acquirer takes on a financial percentage now, with the balance transferred over a mutually agreed upon timeframe. A serial transition can help a potential successor who may be juggling their own staffing, financial, or other issues, making you a more attractive partner.  

Quantify Upside Potential for the Buyer  

You know your firm and clients. Estimate the growth you can reasonably expect once you have merged with another firm. If the acquiring firm has additional skills and service expertise that will be beneficial to your existing clients, figure out that value and be ready to communicate that to the next owner.  

Incentivize Performance in the Compensation Structure

By including performance-based goals into your compensation plan, you will make it clear that you are a true partner looking for everyone to benefit from the deal. You might also consider deferring parts of your compensation package to a later date. Being creative and realistic can be a game-changer to closing the best deals.

Sweeten the Pot for Staff to Stay  

A buyer will want a realistic idea of how many team members will remain after a merger. Create an incentive plan before the merger that is attractive to team members and the buyer. For instance, offering a bonus for staying with the firm can be supplemented with proceeds from the sale.  

It may go without saying, but be ready to work with select clients on a limited basis during the buy-out period to maintain their retention. Also, try to start the succession planning process many years before you actually want to sell. As you prepare, be aware of the marketplace and your firm’s competitive advantages. At the same time, don’t be too aggressive or grandiose. That may be read as desperation.  

Planning, flexibility, and understanding the market will be key to your success as a seller in today’s M&A market.  

Ira S. Rosenbloom, CPA (inactive), is chief operating executive at Optimum Strategies in Spring House, Pa., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at ira@optimumstrategies.com.  

Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.  

Tax

By Ira Rosenbloom, CPA (Inactive)  

The mergers and acquisition (M&A) market for accounting firms is crowded right now with owners looking to sell their practices and retire.

According to firms polled in the Rosenberg 2022 Practice Management Survey, 25% of firms making more than $2 million a year have partners over the age of 60. For firms making less than $2 million, that number jumps to 42%. The survey also notes that one out of four accounting firm partners are near or past their mandatory retirement age provisions.

In addition, the percentage of multipartner firms that expect to make an acquisition in the next three years ranges from 23% to 73%, depending on revenue. Generally, the percentage rises as firm size increases.

The data starts to paint a picture of older firm owners looking to get out. Even though many firms may be in the market to acquire, it’s also harder than ever to become an attractive, and valued, practice.

So, what’s a firm owner of the baby boom generation to do given the circumstances? Here are seven recommendations to optimize results when making a deal in a buyers’ market.  

Be Flexible with Valuations and Deal Terms  

Think about how to package the elements of your practice to be most exciting to your target buyer. For instance, you may think a high number of top-tier clients will bring high value, but a buyer might spy future risk if these clients aren’t retained. Explore how you can build engagement benchmarks into the deal so buyers will be more comfortable with client retention. You might have a lot of Form 1040 tax clients, but a buyer won’t be as interested if client fees are all in a lower range.  

Invest in a Coach  

Retiring owners not only must make a good first impression, they also need to be at the top of their game in each subsequent meeting. Work with a communications coach so you articulate your information tactically and are prepared for curve balls. Knowing your metrics will be key, but how you position them is equally important. Make sure calls are timely and emails are polished.  

Clean Up Your Client Base  

If you will eventually be looking to market your firm for sale, the time is now to either eliminate engagements that are poor performers or create improvements that boost your performance metrics. No one wants a fixer-upper in a hot M&A buyers’ market.  

Explore a Serial Transaction  

Consider a deal in which an acquirer takes on a financial percentage now, with the balance transferred over a mutually agreed upon timeframe. A serial transition can help a potential successor who may be juggling their own staffing, financial, or other issues, making you a more attractive partner.  

Quantify Upside Potential for the Buyer  

You know your firm and clients. Estimate the growth you can reasonably expect once you have merged with another firm. If the acquiring firm has additional skills and service expertise that will be beneficial to your existing clients, figure out that value and be ready to communicate that to the next owner.  

Incentivize Performance in the Compensation Structure

By including performance-based goals into your compensation plan, you will make it clear that you are a true partner looking for everyone to benefit from the deal. You might also consider deferring parts of your compensation package to a later date. Being creative and realistic can be a game-changer to closing the best deals.

Sweeten the Pot for Staff to Stay  

A buyer will want a realistic idea of how many team members will remain after a merger. Create an incentive plan before the merger that is attractive to team members and the buyer. For instance, offering a bonus for staying with the firm can be supplemented with proceeds from the sale.  

It may go without saying, but be ready to work with select clients on a limited basis during the buy-out period to maintain their retention. Also, try to start the succession planning process many years before you actually want to sell. As you prepare, be aware of the marketplace and your firm’s competitive advantages. At the same time, don’t be too aggressive or grandiose. That may be read as desperation.  

Planning, flexibility, and understanding the market will be key to your success as a seller in today’s M&A market.  

Ira S. Rosenbloom, CPA (inactive), is chief operating executive at Optimum Strategies in Spring House, Pa., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at ira@optimumstrategies.com.  

Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.