Many business types grow through acquisition, tax practices and CPA firms are such businesses. If you think about it, it would take a very long time and a lot of money in marketing to get 100 new clients. If you market to 1000 people, you would be lucky to get 30 people to even call you back, and out of those you might close a few. So growing through acquisition definitely makes sense in this industry.
When determining whether the practice is a good fit you, there are several key components. Whether it’s a tax service business or a CPA firm, how many of the clients are mail in and how many require a "face to face" meeting. If it’s mostly mail in, then Geographic's don't matter much. However if there are a healthily percentage that require a meeting and your office is too far from the main demographic, then will most likely have a much higher attrition rate.
Another consideration in with CPA firms or Tax Practices, the billing rate should be on par to what you are currently charging. If your rate is approximately $250 an hour, don't buy a practice that bills at $150 an hour, thinking that you'll be able to implement a rate increase with these clients. Rate increases are very touchy and they can be increased but after a few years when trust has been established. Trying to do that in the beginning of the transfer will ensure a disastrous attrition.
It's important to look at the type of business the business is doing. Are they doing personal returns, corporate fillings, booking keeping, etc… you want to find a business that not only compliments your current client base but also you’re skill set. If you’re going to take on a lot of work that’s getting done throughout the year make sure that you have the staff to support it. You are not an Island and during the first couple of years of the transition the clients will be watching you and how you handle them the previous person might have earned some grace after 15 years but you have none and must be at your best.
Finally be ready to pounce! These types of businesses get sold quickly so be prepared. Know what you want, have your proof of funds ready and a resume of the current practice that you’re running. The seller is going to want to know who you are for two very important reasons. One he/she has known these people for a long time moist probably and he doesn’t want the accounts to be put in the hands of someone unprofessional or incompetent. Not only would he feel terrible but he will most like field all the "bad" calls for quite some time. Secondly, these businesses are most always sold with a note and some type of guarantee. The seller will have a vested interest in your success, so he’ll be interviewing you as much as you’re interviewing him.
Stay tuned for more articles regarding buying and selling CPA Firms and Tax Practice Businesses.
About The Author: Christina Lazuric is an Orange County Business Broker who shares her broker experiences with BizBen readers and has had varied direct small business experience in the past but now assists small business owners sell their business and offers business buyers find their dream business to operate. Phone Christina direct at 949-257-7823.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Chris Seaman, Business Broker - San Diego County Area
Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.
|William Park, Business Broker - Southern California
Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.
|Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance
For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.
|Rick Carlson, Business Broker - Southern California
You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.
|Christina Lazuric, CBI, Business Broker - Orange County
California's Premier Brokerage for Selling Orange County Service Based Businesses since 2005! C.B.B. provides a step by step approach to Business Brokerage, Mergers & Acquisitions, Business Consulting and Valuations. We work on creating the best possible presentation for your business!
|Ryan Clark, Business Broker, Southern California
The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan at 310-652-8353.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Buyer Asks: Is Buying A Service Based Business A Good Choice These Days?
I've been selling businesses a long time & I get many calls from buyers who are open to buying something but aren't sure what would be a good investment. I'll get asked what I would buy if I was them and my answer is always the same, "a service business". Business broker Chris Lazurik explains.
|Deposits With Business Purchase Agreements: How Much? Structure? Refundable?
Purchase agreements when buying or selling a small business can be tricky. A top Southern CA Business Broker discusses this topic including multiple strategies regarding deposits with business purchase agreements. Lee Petsas (Orange County Business Broker) at 714-363-044 contributes this blog post
|Differences Between Business Appraisers, CPA's, And Due Diligence Experts
What are the differences between a Business Appraiser, CPA auditor and Due Diligence Expert - and why should you care? Insights from Willard Michlin, CPA in his latest BizBen blog post that will be useful for someone engaged in, or planning to conduct due diligence in the future
|Podcast/Vlog: Business Purchase Financing Chat: SBA Loan, Non SBA Financing
Ever wonder what is involved in obtaining business purchase financing to buy a business or franchise? Peter Siegel, MBA who has over 20 years advising and obtaining all types of financing for business buyers in this video/podcast - SBA loans, Non-SBA Financing, Alternative Financing Sources.
|Who Really Represents The Business Buyer In A Deal? Does Dual Agency Work?
Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottom line is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals.
|Broker Explains Allocation Of The Purchase Price When Selling A Business
There are a handful of key asset categories in allocating or breaking down the purchase price allocation of a California business sale. Allocation is required to complete the transaction. In this blog post Lee Petsas (Orange County Business Broker) at 714-363-0440 covers asset allocation classes.
|Attorney Specialist Shares Escrow Instruction Tips When Buying A Business
Once you have successfully negotiated the Asset Purchase Agreement ("APA") for your acquisition it's natural to relax a little and let your guard down. Attorney Specialist Mark Chatow discusses what business buyers should look out for when opening escrow and getting escrow instruction in place.
|Thinking About Selling A Small Business? Know These 8 Factors That Matter
The likelihood of selling a business is often determined by external factors in the marketplace. Here are eight influences on how easy, or difficult it might be when selling a small California business. Peter Siegel at 866-270-6278 (BizBen ProSell Program) explains these factors for owner/sellers.
|See All News, Tips And Events|