Who Will Buy My CPA Practice?

When someone considering a sale of their CPA/accounting practice begins a discussion about exit, the conversation almost always turns to the kind of buyer that may purchase the firm. Buyers come in all kinds of shapes and sizes and it is important to understand the nuances of each buyer as you are contemplating a sale to them.

Private Equity Firms: Private Equity (PE) Firms are firms that gather capital from investors and buy companies to run and profit from. They usually hire the replacement of the selling principal; pay them a salary and sometimes an equity stake in the business. PE firms have historically targeted only firms that have one million or more in EBIDTA (earnings before interest, depreciation, taxes, and amortization). However, we have seen more and more PE firms enter the market as a buyer of accounting and CPA firms. Not only are they entering the market as buyers but they have substantial capital and are targeting firms with as little as a hundred thousand in gross billings.

Consolidators: Consolidators are usually larger regional or national firms but not always. They already have an infrastructure, employees, and systems. They hope to benefit from economies of scale and can easily fold in an existing practice and can command above average returns because of the efficiencies and economies they have received with volume.

Individual Buyers/Partners: Individual buyers can be made up of one individual or several partners looking to either grow their firm or start a firm. These are the preferred buyers for many of the small to mid-sized accounting firms. They usually have less capital but enough capital to finance the purchase. The reason sellers prefer this type of buyer is that they believe (right or wrong) that their clients will be better taken care of by these groups.

Strategic Buyers: Strategic Buyers are already operating in the CPA or accounting space. They are already familiar with the tax code, accounting, bookkeeping, and payroll and wish to strategically change their operation by adding additional volume, a new geographic territory, or additional products. All of the above could be strategic buyers.

If you want to know more about the types of buyers that you will encounter when selling your CPA or accounting practice, you should consider talking to a business intermediary that specializes in this space. Berkshire Business Sales and Acquisitions is a specialty business broker that understands the nuances of accounting practice exit.

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