In the typical alliance, a regional or large local firm forms a formal arrangement with several smaller firms. The smaller firms often offer some special knowledge or resources. The services not provided by the smaller firms, such as valuations, cost segregation, etc., are referred to the larger firm. The larger firm refers work/clients it doesn’t handle. This may be smaller clients, individual tax returns, retirement plan audits, etc.

The firms agree not to pirate each other’s clients. Therefore, the smaller firms can provide special services to their clients without the fear of losing them.

The larger firm may provide services to the smaller firms in the area of CPE, marketing, technology, etc.

Smaller firms, especially sole practitioners, can arrange a practice continuation agreement with the larger firm or other firms in the alliance. Sometimes alliances create acquisition transactions between firms.

From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, February 2006, p.12. For another article on this subject, click on the following link: //www.cpaleadership.com/members/382.cfm.