In an M&A Deal, Buyers Often Have a Succession Plan Too

In an M&A Deal, Buyers Often Have a Succession Plan Too

by Ira S. Rosenbloom, CPA (inactive) | Apr 21, 2020

DigJrnlSucPlan_250x383The common perception of accounting firm mergers and acquisitions (M&A) is that these deals are driven by the succession and exit planning challenges of the selling practices who may have too thin of a bench of talent from which to pull for continuation. So, these firms look outside for a buyer to continue to serve clients and support and enable existing team members.

There is one part of the M&A equation that is important to note: succession is not unique to one side of the table. Buyers, too, have succession issues that impact their approach to M&A. Here are four general succession concerns that often guide buyer-side decisions.


Buyers may not have an abundance of excess talent, especially leaders with a capacity to take on more, do more, and act with executive presence. To preserve the talent that buyers have, they will look to time a transaction in a way that generates more work – which will help promote people and make them become more invested in the firm. This type of buyer is going to accelerate their efforts.

Those firms who have existing obligations and commitments to retiring partners are going to set a pace so they do not interfere with those transitions. These firms will defer transactions to a date that is practically appropriate, and will often walk away from a great fit because they can’t make the timing work.


Buyer firms with partners who have specialty skills and who will be retiring in the next five years will be more focused on bringing in a firm that adds the talent and skills to allow the partners to retire. Much more time and attention will be invested in getting to know the targets as people and to learning how good their client care and daily professional behavior looks. Getting to know the candidates in depth is recommended for any kind of combination, but when it relates to replacing an existing partner with unique skills it becomes more critical.

There is a growing number of buyers who want to make their firms less dependent on having to find traditional CPAs to build and replenish their team. These firms want to diversify their offerings, so they are not as inclined to add more traditional or accounting-oriented providers. They will look for firms with strong consulting and support options, so they don’t need as much bench to transition out their people or support their accounting service lines. When they do look at accounting firms, they become very specific and generally look for easy transactions.

Successful buyers will put an emphasis on compatible culture and adaptability. Given the potential for turnover after the merger – and the concern about the happiness of the staff of the successor – many will see smaller firms and firms that may not come under one roof as better choices.

Practice Perpetuity

Buyers enter mergers and other transactions to become stronger and more sustainable. Sustainability could be all about finding replacement talent as discussed above, or it could be about engineering the firm for its own transition.
Consolidation has been going on for quite some time. As the wave continues, a certain size and profile of firms become the new target.

Current buyers are future sellers. In other words, there are a growing number of businesses completing transactions to make the firm more appealing to an even larger firm. For example, if a firm that is not in the region is looking to enter a new market, they will want a firm that has a certain size, presence, and reputation. Acquiring a firm or firms to meet the out-of-towners’ taste is a popular and appealing strategy. The reasons used to attract a smaller firm to join the current successor may work to convert a current successor to become part of an even larger firm.

Longer Process

While the acquirer’s partners or owner will be making the final decision on dealmaking, there is a growing sensitivity and awareness to what M&A means to the future leaders and rank and file. Keeping the current team intact to avoid staff and client turnover is a real business priority for a successor. So, deals will now often include more people in the process than previously.

Involvement starts with profiling targets and continues through filtering, investigating, and integrating. The more players involved, the longer the deals take to pull together. Extended timelines, however, often stand in the way of making sellers comfortable – and may even provoke anxiety or eliminate opportunities for the buyer.

Many buyers have enjoyed strong growth in recent years and are very busy. The buyers and their merger team know that good times do not continue uninterrupted. As a result, they will consider deals to diminish the impact of the down cycles, but fitting mergers into their busy calendars may be a contributor to extending the timeline for those transactions. In addition, there are now so many firms looking for a successor that potential buyers have more options to review. Consequently, it takes much longer.

The best dealmakers are cognizant and respectful of the issues that affect all the parties to the deal.

Much like sellers have challenges that bring them to the table, buyers do as well. Transparency will go a long way toward getting the right transaction completed. Buyers should be as comfortable sharing their reality and challenges just as sellers are naturally compelled to do. The challenges of succession for buyers are just as real as they are for sellers, but they can lead to an exciting and lucrative dealmaking solution for both parties.


Ira S. Rosenbloom, CPA (inactive), is chief operating executive of Optimum Strategies in Spring House. He can be reached at


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