The Importance of Communicating with your CPA Practice Seller (Part II)

Here are some additional questions to ask the owner of the CPA practice you are considering:

How much time is required to put into running the practice? We know that running an accounting practice is a full time job but it is still important to ask how many hours a week are typically needed to ensure that the practice is operating at optimal levels. The answer to this question will give you an inside look at the structure of the firm, their employees and their roles, and what you as the owner will be responsible for. You may find out that the time commitment needed is more than you are comfortable taking. You may learn that the practice has reliable employees that can handle most of the daily tasks. This information will be helpful in making a more informed decision.

What is your annual revenue and net profit? Clearly, the firm’s financial information will be a critical element in your decision making process. At some point, you will need to see a detailed outline of their revenue, expenses, taxes, and profit. Once you know the financials, you will be able to determine if this is a viable business and if there are expenses able to be trimmed to enhance your overall profitability.

What marketing methods do you use? You will want to know how the CPA practice promotes itself and builds clientele. Is it mostly from referrals? Do they use traditional advertising methods such as TV and radio? Do they have a website and/or are they using any online promotional methods? Look for any possible holes in their marketing and ways that you may be able to build greater exposure in the local marketplace. If so, you may already have a good idea of how you can make the practice even more successful than it already is.

While communicating with your seller is important, it is also important to work with a reputable business broker. When purchasing a CPA practice, it only makes sense to partner with someone who specializes in this specific industry. This will ensure that you will be informed of all potential issues that may arise as you move through the buying process.

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