So you’ve decided: you’ve got your accounting qualifications, you’ve been practicing for some time and now you’re ready…
Ready to buy a tax and accounting business of your very own!
But are you really ready?
Buying out a new firm is rarely an overnight process and nor should it be. After all, once it’s bought – it’s yours! That’s a responsibility you want to take on carefully.
So here are 5 key qualities to look out for and make sure it’s the perfect business for you…
- A fabulous fee structure
Lots of attractive accounting firms may be for sale, but don’t skim over the nitty gritty details. The type of fee structure is one such detail that will determine whether this firm is the right one for you.
Chartered practice accountants are notorious for undercharging on their services. Do you really want to work in a business that undervalues your hard work? Watch out for fees that seem too low or professionals that look overworked.
However, don’t necessarily be deterred. It’s possible you can buy a firm and raise fees once you’re in a key role – a bargain for you in the short-term and a feasible financial decision in the long-term.
Scrutinise the clients and services and see how much is being charged. If you see a fabulous fee structure (or one that you think is capable of mighty transformation), then you could be on to a great deal.
- A location that works
It’s a surprising fact that many buyers overlook location when looking for a tax and accounting firm. Remember that this place will ultimately be your new home away from home… do you really want to be commuting for hours each day? Or working in an isolated part of town?
Think about what you want in a community. How you want to feel going into work each day. Where you’ll eat lunch and whether you like the area or not.
While talking to accounting practice owners across the states might be an interesting journey, it’s a waste of time if you’re only willing to work near you.
Focus first on spots in the right locations. Narrowing down your search will make it easier to analyse the other qualities that are important to you, not to mention setting you up for a more comfortable place to work into the future.
- The perfect work-life balance
Your new accounting firm may be your workplace, yes, and also (hopefully) a great source of income – but it also needs to fit into your life.
If the existing culture is all about clocking 60 hours a week and the seller is in over his head, you have to consider: is this really the kind of beast you want to marry?
Another alarm bell is if the accounting practice niches in a type of business you’re not well-versed in. The time it takes for you to graduate beyond your training wheels and learn on the job may not be worth the sacrifice.
Particularly if you have children or other commitments, try to steer clear of businesses that tax your quality of time outside of work.
Look instead for a firm you can steer easily from the get-go. You’ll spend less time behind the desk – and more time out living your life!
- Affordable buy-in price
Don’t bite off more than you can chew.
While there are some good financing options available for accounting practice acquisitions, a down-payment is generally a necessity. As a rule, you’ll need to pay at least 10 percent of the purchase price.
And even beyond the initial deposit, there may be other costs involved in acquiring the business that you’ll need to be confident are comfortable for your financial situation. These costs will typically be based on the size, structure and type of accounting business you have your heart set on.
Look for a firm you can afford right now, based on the savings you currently have. But also keep one eye on the future.
The more confident you are in your ability to make the purchase, the less stress you’ll experience down the track.
- Clients you’ll love
What sort of CPA firm are you willing to buy?
Think carefully. A business that largely deals with flaky clients could be a costly mistake in the long-term. On the other hand, a business that has great client retention rates and strong relationships will likely be a more reliable investment.
It’s also advisable that you buy an accounting business that deals with the sort of clients you’re used to. That way, you can integrate into the team smoothly with a sense of familiarity with the types of issues they’re likely to face.
If you have expertise in looking after small business clients, don’t invest in a firm that deals with large corporations. If you dream of helping entrepreneurs, try to find a firm that’s already creating big waves in this space.
Unless you’re willing to jump on a massive learning curve, stick to what you know and you’ll have the best chance of making an acquisition that’s right for you.
Your first business acquisition is an exciting milestone in your tax and accounting career. But without taking the right precautions, you may be at risk for buying a business that isn’t worth it.
Remember – saying no is just as important as saying yes in this game.
So think wisely about where you decide to look and keep these 5 qualities top of mind.
You’ll be well-equipped to jump on the perfect opportunity when you see it… and that’s a successful acquisition!