A Sellers Market for CPA & Accounting Practices

The best time to sell your CPA or Accounting practice has mostly to do with the external factors in your life. Your health, your life/work balance, your spouse’s retirement, financial commitments, and retirement plans all determine when its time. In some cases, I talk with practitioners for years and each year they decide to go one more year. In one scenario, the individual kept telling me they are 3 years away. It’s a rolling 3 years and each year when I ask him, he jokes “sometime in the next 3 years”, he says. The time to pull money out of your practice is while you are operating it but in exit, it does contain tremendous value and that value can be sold to aid you in retirement.

However, something to consider is the demographics of the population of CPAs and accountants. There is an aging demographic of CPAs and Accountants. There are fewer entrants than ever before and there are more barriers to entry than ever before.

We currently have a sellers market for CPA and Accounting firms. For every practice I sell, there are between 20-30 buyers. After weeding through the buyer’s qualifications, there should result in 5-10 interested qualified parties and multiple offers. With so many buyers why even discuss this?

For one, a sellers market changes the leverage position of the buyer. With multiple offers to choose from the buyers need to make sure they have put the best foot forward and a seller can be more aggressive in requesting specific deal points that benefit the seller.

A larger and more deliberate point that I am trying to make is that while we see the population aging, we do not see them exiting at the same pace. In some cases, this was caused by the recession and lost clientele caused the principal to rethink retirement. In some cases, fear of the recession or financial losses in the real estate market have delayed the retirement date. In other cases, people are just living longer and this profession allows you to work for long past the legal retirement age. Regardless of the reason, we have not seen any mass exits previously predicted.

The aging demographic profile for the accounting industry is cause for some concern, but not in selling today. It is a great time to sell your practice with plenty of demand for practices. At some point in the future, we all have to understand that the metrics that have given a sellers market today will one day reverse themselves into a buyer’s market. If your personal situation has you contemplating a sale, consider doing it sooner rather than later if you are looking for a sellers market.

Be the first to get notified about new listings