Acquiring a Practice: Nine Things You Need to Know
Source: Partner Insights
The following includes excerpts, reproduced with permission, from an article by August Aquila.
Even in a buyer's market, smart buyers of CPA firms should consider the following:
- Understand why you want to acquire a firm. If you cannot articulate how the transaction will make the firm economically better, it might be better to just walk away.
- Do you really know the seller? My experience is that an acquisition takes a good nine months from start to finish.
- Put your best person in charge. Acquisitions often start with a dinner between two managing partners, but your representative should be the partner who can best deal with detail.
- Don't let emotions rule. Smart buyers identify all the deal breakers up front and know when to walk away from a transaction.
- Think about integration issues up front. My experience with acquisitions is that the real work begins with the integration. Determine what the combined firm's culture will be, what processes will be used, and what systems will remain before you sign the contract.
- Identify “keepers” up front. Identify the key people up front and let them know they are important to the future of the firm.
- Develop a letter of intent. The letter should outline the key financial and nonfinancial terms and prohibit the seller from using your offer to shop around for a better deal.
- Does the firm have previous acquisition experience? First-time acquirers often make financial and operational mistakes, which leads to the next point.
- Decide whether to hire a consultant. Consultants can save you a lot of time searching for the right candidate, holding your hand, and providing you with the necessary checklists.
The above list of items is by no means everything you need to think about. If you are considering an acquisition, especially for the first time, don't try to do it yourself.
For the complete article, read “What to Know Before You Acquire a Practice.”
From Partner Insights, Aquila Global Advisors, LLC, September 28, 2010, http://www.aquilaadvisors.com.