As a firm owner looking to expand your business, acquiring another accounting firm can be a strategic move that offers numerous benefits. However, it’s essential to approach the buying process with careful consideration and a thorough evaluation of various factors that can impact the success of the acquisition.
In this article, we will discuss six key factors you should consider when looking to buy another accounting firm. By paying attention to these factors, you can make an informed decision that aligns with your long-term goals and maximizes the potential for success.
#1: Client List
The client list of the accounting firm you are considering buying is a crucial factor to evaluate. Assess the quality, diversity, and stability of their client base. Is it niched in an industry you’re familiar with? What will you need to know to serve those clients?
Look for firms that have a loyal client following and a solid reputation within the industry. A well-established and diverse client portfolio can provide a solid foundation for your future growth and revenue generation.
#2: Operating Procedures
Evaluate the operating procedures and systems in place within the firm you intend to acquire. Compatibility and efficiency in processes are vital to ensure a smooth integration of the acquired firm into your existing operations.
Also consider the technology infrastructure, software platforms, workflow management, and other operational aspects. Compatibility in these areas can streamline the transition process and minimize disruptions to client service, which is the most important thing to manage as a firm owner.
#3: Culture and Team Dynamics
The culture and team dynamics of the accounting firm you plan to buy are essential to evaluate. How compatible is their culture with your existing firm’s values, mission, and work environment? Do they allow employees to work from home or only in the office? You want employees from your firm and the firm you’re acquiring to be in the best positions they can be to succeed.
Consider the expertise, experience, and qualifications of their team members. A harmonious cultural fit and a skilled team can contribute to a successful integration and long-term growth.
#4: Financial Performance
Conduct a comprehensive analysis of the financial performance of the accounting firm you are considering acquiring. Review their financial statements, profitability, revenue trends, and key performance indicators. Pay close attention to any potential risks, liabilities, or outstanding legal issues that may impact the firm’s financial stability. A solid financial foundation is essential to ensure a return on investment and sustainable growth and without it, you could be dealing with a headache trying to get your acquisition on track.
#5: Reputation and Brand Image
Assess the reputation and brand image of the firm you are interested in acquiring. Look for firms that have built a strong brand and positive industry recognition. Consider their track record of client satisfaction, referrals, and testimonials. Acquiring a reputable firm can provide instant credibility and enhance your market positioning.
#6: Growth Potential
Evaluate the growth potential of the accounting firm you are considering buying. Assess the market opportunities, competitive landscape, and potential synergies with your existing operations. Look for firms that offer growth prospects in terms of geographic reach, service offerings, or client segments. A well-aligned acquisition can open new doors for expansion and increased market share.
Brannon Poe, an accomplished accountant, and entrepreneur with over 20 years of experience in the industry shares his expertise on the factors that make a firm valuable for selling or buying in the latest episode of the Building the Premier Accounting Firm Podcast with Universal Accounting Center President Roger Knecht. For more in depth ways to evaluate each of the strategies in this article, which were developed by Poe.
Poe also discusses his take on businesses acquiring other businesses that offer different but complementary services and shares his advice for both the seller and the buyer. He delves into how to approach valuation when planning to buy a business and shares his thoughts on virtual firms and how attractive or unattractive they are to buyers.
If you’re interested in starting your own accounting firm, give call Universal Accounting Center 877-801-8080. Our team of experts will walk you through everything you need to get started, from marketing and sales all the way to preparing books and tax returns and beyond. You can also schedule a time when it’s most convenient for you HERE.