Smart Money Week is a good time to examine the financial considerations of purchasing an accounting practice. Because CPA practices have a seasonal aspect to them, it is important that when entering the business, you will be in a financial position to be profitable not just for 4 months out of the year, but for all 12 months. This will involve a thorough examination of all the pertinent factors to determine whether or not this will be a financially viable purchase. 
Toward that end, here are three of the most important considerations when deciding whether or not to purchase a CPA practice:
Integration of Existing Staff: One of the primary aspects of the purchase of any business is the present staff and how it will blend in with your existing operation. If you are an accountant without an existing practice and purchasing a CPA office to come in and take over, it is far easier to envision what the business will look like going forward. However, if you plan to absorb the new practice into an existing one, the process becomes more complicated. You will need to examine how many employees you can afford to keep based on your existing clientele. And if you need to let some of your staff go, who will you keep and what will be the criteria for their retention?
Retention of Clientele: Another major financial consideration is the client base of the CPA practice you are considering purchasing. You will need to find out what industries these clients represent, and if you have adequate experience/expertise in these industries to continue servicing their accounts. If not, you may need to retain some of the present CPA partners in order to reassure these clients, and there is a cost for this as well. You will also need to examine the relationship the present staff has with the client base. If there is a strong bond between the two, then there is a good chance you will need to keep a lot of the present staff if you hope to retain the current client base. And can you afford to do that in addition to keeping the critical members of your staff as well?
Financing: The biggest key to whether or not the purchase of a CPA practice will work is the financing. You will need to apply your accounting skills and crunch the numbers to make sure they add up to profitability. In general, you should be willing to bring around 33% to the table as a down payment, and depending on credit and other factors, it is possible to finance the rest. There are instances where a 15% to 20% down payment may work. But again, you will need to find out if you can qualify for financing under those terms, AND that the numbers will work based on the staff and clientele considerations.
Other Factors: Clearly, purchasing a CPA practice is a complicated process and it would be impossible to cover every aspect of it here. To ensure that you are making a wise financial decision, it is best to work with a professional broker with particular experience with accountancy practice transactions. With a strong advocate on your side, you can go into the deal with confidence knowing that you are making a fiscally responsible purchase.
