Selling a CPA or accounting firm — marketplace developments
Sunbelt Business Advisors/True North Mergers & Acquisition — Business Perspective
Dan Mulvaney, CPA (inactive), MBA, Sunbelt Business Advisors and Matt Sobieski | October/November 2024 Footnote
Editor's note: Updated October 1, 2024
National expert
Since 2020, our firms have represented sellers and closed the sale of over 30 CPA and tax firms.
In early 2020, we decided to invest resources to specialize in the sale of firms in the accounting industry.
We saw an underdeveloped market. We saw CPA firms selling mostly to other CPA firms or shutting down. Sellers sold from a position of weakness. Unlike our firm’s sell-side results for industries in manufacturing, distribution, and other services, CPA firm owners did not receive cash up front but instead had to take the risk and inconvenience of being paid years after closing.
The Minneapolis office of Sunbelt Business Advisors/True North Mergers & Acquisitions is now a national expert in the sale of firms in the CPA industry. Over the coming years, we intend to grow this specialization with Sunbelt selling smaller firms regionally and TNMA selling larger firms nationally.
We make the markets
In the sell-side profession, to be successful one must understand who the buyers are and how they think. One must understand how buyers value firms, including how they and their investors/lenders finance and structure transactions. We understand these marketplace factors because we make the markets.
Today’s marketplace for Sellers of CPA firms is strong. Buyers recognize that accounting firms generate consistency and growth — attractive criteria for private equity and wealth advisors. Wealth advisors realize that CPA firms possess a treasure trove of business and high net worth clients that can generate financial synergies if properly managed post-closing. These two buyers, in addition to larger CPA firms, have increased demand in the marketplace, resulting in higher sale prices and more cash at closing than transactions a decade ago.
When representing a seller, we take advantage of marketplace supply and demand. By managing a time-based and confidential process, written offers from multiple buyers are the outcome. Multiple written offers from qualified buyers gives the Seller options, not the case when the buyer pool is limited. Our fee is paid mostly at closing, a risk-based model that owners prefer.
Don’t accept faulty assumptions
Assumptions about buyers are sometimes inaccurate. For example, practice owners may assume a buyer will purchase then flip the business for a quick buck. In this case, a buyer purchases a business for X, then sells it months later for X-plus and keeps the difference. This happens in the movies but rarely in real life. Today’s buyers of CPA firms view their purchase as a long-term investment and are committed owners for at least five years, usually longer. Similarly, today’s buyers want to keep all (productive) employees and maintain the historical business model, building on the firm’s foundation.
For aging partners/owners of CPA and tax firms, it is prudent to understand buyers and how each firm is valued by the marketplace
Sunbelt Business Advisors/True North Mergers & Acquisitions is Minnesota’s largest seller of companies. The firms provide services to business owners interested in selling their businesses, assistance with merger and acquisition activities, complimentary business value assessments, and advisement for business owners in understanding how to maximize net cash proceeds at exit. The firm provides business brokerage and mergers & acquisitions advisory services for companies with revenues from $500,000 to $150 million, as well as finance, exit planning, franchise sales, consulting and business valuation services.
Connect
Sunbelt Business Advisors/True North Mergers & Acquisition
Phone: 612-860-0047
Email:
dan@mulvaneysun.com
Web:
www.sunbeltmidwest.com and
www.tnma.com
