Why do Owners Sell their CPA Practices?
At any given time, there are hundreds of accounting practices for sale throughout the United States. And with an increasing number of aging Baby Boomers, this trend is expected to continue for the foreseeable future. On the flip side, accounting services are still in high demand. While it is true that software programs have captured some of the individual tax preparation market, the large number of small to medium sized businesses out there and the complexities of business tax law provide a built-in market for CPA services almost anywhere in the country.
For those looking to acquire a CPA practice, it is important to understand why owners decide to sell; this gives buyers a better idea of the terms and conditions of a potential purchase as well as the motivation level of sellers.
Here are four of the primary reasons CPAs want to sell their practices:
Retirement: Many accountants approaching the age of 65 want to fully or partially retire from their practice and enjoy their golden years. A retiring CPA is not necessarily motivated to sell their practice tomorrow, but they usually want to find a buyer within a year or two tops. One potential benefit to buying from an owner who is retiring is they may agree to continue working with the practice part-time. This can be very helpful in ensuring a smooth transfer of ownership and keeping the current clientele happy.
Career Change: Some CPA practice owners are simply tired or burned out from working in the accounting field. Perhaps they want to use the proceeds to buy a business in another industry or just take some time off for a while. Someone who is looking for a career change usually wants to exit the practice fairly soon. The downside is they may not want to offer much ongoing support once they leave.
Health Issues for Owner and/or Spouse: If the owner or someone close to them is having serious health concerns, there will be a high level of motivation to leave the practice. The owner may still be willing to stay on as a consultant or even work there part-time, but their level of involvement will depend heavily on their specific circumstances.
Job Offer/Relocation: CPAs sometimes receive job offers from clients or other businesses that are too lucrative to pass up. Sometimes these offers may also involve relocating to another part of the country. A CPA selling a practice because of a new job will not usually maintain a high level of involvement in the current practice, but he/she may be willing to remain in a very limited consulting role often providing long distance support via phone or email.
These are some of the common reasons owners sell their CPA practices. When looking for opportunities in your area, it is best to work with a business broker that has particular knowledge of transactions within this industry. This will help ensure that you are fully prepared for each step of the buying process and give you a better chance of a successful purchase.