5 Steps to Selling your CPA Firm for Top Dollar

At the start of 2014, the American Institute of CPAs (AICPA) reported that CPA mergers and acquisitions continue to be on the rise. There are several factors driving this trend. On the buying side, many accounting firms are looking to grow their market share, and sometimes the smoothest and quickest way to accomplish this goal is to acquire a competitor. On the selling side, many established CPAs are looking to exit the business and enjoy their golden years. Accounting practice sales are expected to be strong for the foreseeable future, which is obviously good news for potential sellers.

Although now is a good time to sell an accounting firm, it is still important to have a deliberate exit strategy in place to ensure that you will attract top dollar on your sale. Here are five steps CPA practice owners should take if they want to sell out in the near future:

Plan Early: Selling a CPA practice takes time, perhaps as long as a year to finalize the entire deal. But before you even put the firm on the market, it is important to plan your exit strategy from start to finish. Decide how much longer you want to be in the business, the absolute lowest price you are willing to accept when you sell, if you want to offer financing to the buyer, and other important factors, before getting started. You will also want to make sure to keep your plan confidential so your employees and clients do not start to worry about the future of the firm.

Have your Books in Order Perfect Order: With any business acquisition, it is expected that the selling entity will have clear, accurate and fully transparent bookkeeping. This should show your monthly cash flow, fixed expenses, debt, assets owned, payroll, etc. As an accounting firm, your books should be in perfect order and there should be no loose ends and no surprises for the prospective buyer.

Upgrade your Technology: No one wants to buy into a business that has outdated technology and inefficient systems that cost more than they should. Consult an IT professional to evaluate your technology and make all necessary upgrades to ensure that your firm is running as efficiently as possible. This is one area where it may be worth going into debt, because it will likely more than pay for itself at the time of the sale.

Make the Practice Less Dependent on You: One of the critical steps in executing your exit strategy is to slowly reduce your personal workload and delegate more of your responsibilities to your capable staff. The less dependent your clients are on you personally, the greater the likelihood they will stay after you are gone.

Know the Value of your Practice: Perhaps the most important step before selling your CPA firm is to know its true value. The best way to determine this is by consulting a local business broker that specializes in accounting practice sales. Business brokers have in-depth and up-to-date knowledge about what other firms in the area are selling for and what you can reasonably expect for yours. Even if you do not want to be represented by a business brokerage during the sale of your practice, it is still a good idea to take one on as a consultant to help you through the complexities of the transaction.

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