M&A Resource Article Library
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Transition Advisors, in its role to provide support to CPA Leadership Instiute members with educational material, has created this Resource Center to address important topics such as:
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| The economic environment and the accounting profession are fluid, dynamic, and ever-changing. This is especially true because of the COVID-19 pandemic. Because some of this material was produced prior to 2020, some of the articles and webinars do not consider the effects of COVID-19 on the marketplace for M & A of accounting firms. Nevertheless, this content remains relevant. About Transition Advisors- Transition Advisors is a national consulting firm that works exclusively with the accounting profession developing customized solutions surrounding key succession, M & A, and ownership transition issues. They have helped hundreds of CPA firms over the past 30 years execute strategies to grow through M & A, merge to execute succession and other strategic objectives, and develop internal succession plans including the re-engineering of owner agreements. Joel Sinkin and Terry Putney, CPA have been named to Accounting Today's List of the Top 100 Influential People in Accounting for nine years running. Their team includes Mark Basinski, Russ Best, Bill Carlino, and Nancy Egan all of whom have extensive experience in the accounting profession and with Transition Advisors. |
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Valuing an Accounting Firm
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| Accounting Firm M&A in the World of the Coronavirus Originally published by Accounting Today, April 2020 The economic downturn we are experiencing is clearly unprecedented. The projected drop in the GDP and level of unemployment are anticipated to be as bad as the Great Depression. |
Why is Your Firm Worth Less Than You Think? Originally published by Accounting Today, March 2019 The rule of thumb in today's market is that internal valuations (defined as a multiple of revenues) are running roughly about 80 percent of the value firms can expect to receive in an outright sale. |
| Five Variables When Valuing a Small Firm Originally published by Accounting Today, December 2018 The value of an accounting firm is dependent on many factors -- the nature of the practice, it's size, how profitable the buyer thinks it will be, the perceived competition for the practice from other interested buyers, and its location, as well as many other factors. |
Making 2+2=5 in a Merger Originally published by Accounting Today, October 2018 The real test in assessing a target firm for a potential merger or acquisition is evaluating how profitable the seller's practice will be once combined with the acquiring firm's operating environment. |
| Mergers and Acquisitions of Accounting Firms Originally published by The CPA Journal, December 2017 Mergers and acquisitions are a typical way for accounting firms to grow, expand into new markets, build expertise, and provide for succession. But not all mergers are true combinations of equals, not all firms are ideal matches, and not all acquisitions are structured the same way. |
The following articles are part of a 12-part series originally published by Journal of Accountancy from July, 2013 to June, 2014 titled CPA FIRM SUCCESSION: SOLIDIFYING THE FUTURE View Entire Series |
| Alternative Deal Structures for Succession Originally published by The Journal of Accountancy, January 2014 For CPAs in public practice, the path to retirement usually follows one of two roads - an internal succession or a sale to an external buyer, with the external route offering additional options. |
How to Value a CPA Firm for Sale Originally published by the Journal of Accountancy, November 2013 One of the key components of a CPA succession plan is the sale or transfer of the retiring CPA's ownership interest. How is the value of that interest determined? In most circumstances, the value of an owner's interest is different when selling to an external buyer than it is in an internal transaction. |
| A Two-Stage Solution to Succession Procrastination Originally published by The Journal of Accountancy, October 2013 Deal structure provides a path to retirement for CPAs who fear a loss of control or income. |
The following articles are part of a 3-part series originally published by Journal of Accountancy from October, 2014 to December, 2014 titled Valuations of Accounting Firms: Internal, Mergers, Sales-Large and Small View Entire Series |
| Pricing Issues for Midsize and Large Firm Sales Originally published by The Journal of Accountancy, November 2014 It is no simple task for accounting firm owners to figure out how much they should be paid when they are looking to sell. The job is especially complex for firms with at least five owners. |
How to Price an Owner's Interest in a CPA Firm Originally published by the Journal of Accountancy, December 2014 Dramatically different demographic and market conditions require new strategies to pay for buyouts. |
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Succession Planning
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| Voices: Accounting firm M&A in the World of the Coronavirus Originally published by Accounting Today, April 2020 The economic downturn we are experiencing is clearly unprecedented. The projected drop in the GDP and level of unemployment are anticipated to be as bad as the Great Depression. |
Never Take a Practice Merger Off the Table Originally published on PICPA.org, March 2020 About 20% of all CPAs who can decide when and if they will retire will simply choose turn out the lights- as their exit strategy. That means, essentially, one day they will walk away from their practice or possibly sell what may be left when the practice is a shell of its former self. What are their options? |
| The Four Exit Ramps for Your Career Originally published by ncaCPA.org, December 2019 The end of your professional career is something you will eventually face. How will you manage that? This article discusses the four options you have for your eventual retirement from public accounting. |
Why is Your Firm Worth Less Than You Think? Originally published by Accounting Today, March 2019 The rule of thumb in today's market is that internal valuations (defined as a multiple of revenues) are running roughly about 80 percent of the value firms can expect to receive in an outright sale. |
| The Flawed Economics of Admitting New Partners Originally published by Accounting Today, August 2018 If you have ever bought a practice off the street, you know you can't keep paying the seller their historical level of full-time compensation and pay for the practice purchase at the same time. Yet many internal purchase arrangements are set up under the same flawed economics. |
Five Ways to Beautify Your Firm for M&A Originally published by Accounting Today, July 2018 It was not that long ago that it was a seller's marketplace in CPA firm mergers and acquisitions, but for most marketplaces in this country and especially for larger firms, it has become a buyer's marketplace. As a result, it has never been more important to make your firm more attractive to a successor firm. |
| The Emotional Side of Firm M & A Originally published by Accounting Today, July 2017 While much has been written about the technical and financial aspects of mergers and acquisitions between accounting firms, one of the most important but often overlooked stages of the process involves the emotional side of an affiliation. |
How to Admit New Partners: A Fresh Approach Originally published by Journal of Accountancy December 2015 The AAV method can help accounting firms find the right formula for bringing in new owners on terms everyone can live with. |
| Roadblocks to Avoid in Accounting Firm M&A Originally published by the Journal of Accountancy, September 2015 Whether you are buying or selling, these tips can help you navigate the potential pitfalls on the road to closing the deal. |
Exit Strategies for Owners of CPA Firms Originally published by the Pennsylvania CPA Journal, Summer 2015 If you are an owner of a small to medium-sized CPA firm, the demographics say you are going to reach normal retirement age within the next 10 years. If you don't personally fall into that group and you have partners, there is a good chance at least one of them will be retiring at some point over the next decade. |
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Ownership Agreements
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| Four Items that Should be in Every Firm's Ownership Agreement Originally published by Accounting Today September 2018 Most ownership agreements contain the critical basic terms you need to have. While there are many aspects to drafting a strong ownership agreement, we find four items missing all too often. |
Why is Your Firm Worth Less Than You Think? Originally published by Accounting Today March 2019 The rule of thumb in today's market is that internal valuations (defined as a multiple of revenues) are running roughly about 80 percent of the value firms can expect to receive in an outright sale. |
| The Flawed Economics of Admitting New Partners Originally published by Accounting Today, August 2018 If you have ever bought a practice off the street, you know you can't keep paying the seller their historical level of full-time compensation and pay for the practice purchase at the same time. Yet many internal purchase arrangements are set up under the same flawed economics. |
How to admit new partners: A fresh approach Originally published by Journal of Accountancy December 2015 The AAV method can help accounting firms find the right formula for bringing in new owners on terms everyone can live with. |
| Retaining Clients During a Firm Transition Originally published as a chapter in the eBook, Next Level Accountants: Your Guide to Growing a Firm of Trusted Advisors by Mary Ellen Biery. To download the complete book, visit Sageworks.com View Article |
The following articles are part of a 3-part series originally published by Journal of Accountancy from October, 2014 to December, 2014 titled Valuations of Accounting Firms: Internal, Mergers, Sales-Large and Small View Entire Series |
| How to Price an Owner's Interest in a CPA Firm Originally published by the Journal of Accountancy, December 2014 Dramatically different demographic and market conditions require new strategies to pay for buyouts. |
The following articles are part of a 12-part series originally published by Journal of Accountancy from July, 2013 to June, 2014 titled CPA FIRM SUCCESSION: SOLIDIFYING THE FUTURE View Entire Series |
| Managing Owner Transition Through an Owners' Agreement Originally published by the Journal of Accountancy, March 2014 For accounting firms dealing with partner succession, the owners' agreement can be one of the most important tools for (1) managing the transition of ownership and (2) establishing a culture for owner performance. Managing the transition of ownership is usually the reason a firm drafts an agreement in the first place. |
How to Manage Internal Succession Originally published by the Journal of Accountancy, February 2014 The success of most accounting firm succession plans rests on the firm's ability to develop young talent into owners capable of buying out retiring partners and carrying the firm into the future. Unfortunately, many firms have little or no talent ready to assume this role, and many of the firms that do have talented staff on board don't know how to convert them into owners. |
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Trends in M & A
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| Accounting Firm M&A in the World of the Coronavirus Originally published by Accounting Today, April 2020 The economic downturn we are experiencing is clearly unprecedented. The projected drop in the GDP and level of unemployment are anticipated to be as bad as the Great Depression. |
The Four Exit Ramps for Your Career Originally published by ncaCPA.org, December 2019 The end of your professional career is something you will eventually face. How will you manage that? This article discusses the four options you have for your eventual retirement from public accounting. |
| Getting Ahead of Next Tax Season Originally published by Accounting Today, November 2019 While the smoothest tax season might be one with no surprises, the practitioner who anticipates and is ready for unexpected issues will sleep better at night knowing they are prepared. |
Evaluating Culture in M&A Originally published by Accounting Today, November 2019 In our experience, the parties to most mergers & acquisitions between accounting firms focus a lot of attention initially on clients, service mix, and billing rates during the initial stages of the process. |
| What's Driving Upstream Mergers? Originally published by Accounting Today, June 2019 Traditionally, an overwhelming number of firms seeking to merge upstream have done so to address partner succession. |
Views on Practice Management Originally published by The CPA Journal, December 2018 The biggest growth we see is, once again, firms adding niches such as IT consulting, HR, cybersecurity, litigation support, and valuation. |
| Building a State-of-the-Art M & A Target Originally published by Journal of Accountancy, August 2018 A firm can enrich its value to prospective suitors by investing in a top-notch IT infrastructure and exhibiting a willingness to embrace new technologies. |
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Alternative Deal Structures
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| How to Properly Value Your CPA Firm Originally published on accounting WEB, December 2019 Firms looking toward an external succession via a merger want to know what they should expect to be paid, or conversely, those looking to acquire a practice want to get an estimate of what they would pay in today's M&A market. |
Making 2+2=5 in a Merger Originally published by Accounting Today, October 2018 The real test in assessing a target firm for a potential merger or acquisition is evaluating how profitable the seller's practice will be once combined with the acquiring firm's operating environment. |
| Mergers and Acquisitions of Accounting Firms Originally published by The CPA Journal, December 2017 Mergers and acquisitions are a typical way for accounting firms to grow, expand into new markets, build expertise, and provide for succession. But not all mergers are true combinations of equals, not all firms are ideal matches, and not all acquisitions are structured the same way. |
The Flawed Economics of Admitting New Partners Originally published by Accounting Today, August 2018 If you have ever bought a practice off the street, you know you can't keep paying the seller their historical level of full-time compensation & pay for the practice purchase at the same time. Many internal purchase arrangements are set up under the same flawed economics. |
| The following articles are part of a 12-part series originally published by Journal of Accountancy from July, 2013 to June, 2014 titled CPA FIRM SUCCESSION: SOLIDIFYING THE FUTURE View Entire Series |
Alternative Deal Structures for Succession Originally published by the Journal of Accountancy January 2014 For CPAs in public practice, the path to retirement usually follows one of two roads - an internal succession or a sale to an external buyer, with the external route offering additional options. |
| A Two-Stage Solution to Succession Procrastination Originally published by Journal of Accountancy, October 2013 Deal structure provides a path to retirement for CPAs who fear a loss of control or income. |
The following articles are part of a 3-part series originally published by Journal of Accountancy from October, 2014 to December, 2014 titled Valuations of Accounting Firms: Internal, Mergers, Sales-Large and Small View Entire Series |
| Pricing Issues for Midsize and Large Firm Sales Originally published by The Journal of Accountancy, November 2014 It's no simple task for accounting firm owners to figure out how much they should be paid when they are looking to sell. The job is especially complex for firms with at least five owners. |
Pricing Issues for Small Firm Sales Originally published by The Journal of Accountancy, October 2014 For CPAs looking to sell their accounting practice, it can be a big plus to be in a small firm. That's because small firms generally can command higher multiples than big firms, and external sales usually produce higher prices for accounting practices than internal ownership transfers. |
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Merging an Accounting Firm
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| Mergers and Acquisitions of Accounting Firms Originally published by The CPA Journal, December 2017 Mergers and acquisitions are a typical way for accounting firms to grow, expand into new markets, build expertise, and provide for succession. But not all mergers are true combinations of equals, not all firms are ideal matches, and not all acquisitions are structured the same way. |
Accounting Firm M&A in the World of the Coronavirus Originally published by Accounting Today, April 2020 The economic downturn we are experiencing is clearly unprecedented. The projected drop in the GDP and level of unemployment are anticipated to be as bad as the Great Depression. |
| Never Take a Practice Merger Off the Table Originally published on PICPA.org, March 2020 About 20% of all CPAs who can decide when and if they will retire will simply choose turn out the lights- as their exit strategy. That means, essentially, one day they will walk away from their practice or possibly sell what may be left when the practice is a shell of its former self. What are their options? |
Getting Ahead of Next Tax Season Originally published by Accounting Today, November 2019 While the smoothest tax season might be one with no surprises, the practitioner who anticipates and is ready for unexpected issues will sleep better at night knowing they are prepared. |
| Evaluating Culture in M&A Originally published by Accounting Today, November 2019 In our experience, the parties to most mergers & acquisitions between accounting firms focus a lot of attention initially on clients, service mix, and billing rates during the initial stages of the process. |
What's Driving Upstream Mergers? Originally published by Accounting Today, June 2019 Traditionally, an overwhelming number of firms seeking to merge upstream have done so to address partner succession. |
| After the Merger: Creating a Culture of Success Originally published by Journal of Accountancy, December 2018 Incorporating the right components into a post-closing integration plan improves the odds for a smooth transition and positive results. |
Making 2+2=5 in a Merger Originally published by Accounting Today, October 2018 The real test in assessing a target firm for a potential merger or acquisition is evaluating how profitable the seller's practice will be once combined with the acquiring firm's operating environment. |
| Building a State-of-the-Art M & A Target Originally published by Journal of Accountancy, August 2018 A firm can enrich its value to prospective suitors by investing in a top-notch IT infrastructure and exhibiting a willingness to embrace new technologies. |
Five Ways to Beautify Your Firm for M&A Originally published by Accounting Today, July 2018 It was not that long ago that it was a seller's marketplace in CPA firm mergers and acquisitions, but for most marketplaces in this country and especially for larger firms, it has become a buyer's marketplace. As a result, it has never been more important to make your firm more attractive to a successor firm. |
| The Emotional Side of Firm M & A Originally published by Accounting Today, July 2017 While much has been written about the technical and financial aspects of mergers and acquisitions between accounting firms, one of the most important but often overlooked stages of the process involves the emotional side of an affiliation. |
Roadblocks to Avoid in Accounting Firm M&A Originally published by Journal of Accountancy, September 2015 Whether you are buying or selling, these tips can help you navigate the potential pitfalls on the road to closing the deal. |
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Due Diligence & Transition
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| After the Merger: Creating a Culture of Success Originally published by Journal of Accountancy, December 2018 Incorporating the right components into a post-closing integration plan improves the odds for a smooth transition and positive results. |
Getting Ahead of Next Tax Season Originally published by Accounting Today, November 2019 While the smoothest tax season might be one with no surprises, the practitioner who anticipates and is ready for unexpected issues will sleep better at night knowing they are prepared. |
| Evaluating Culture in M&A Originally published by Accounting Today, November 2019 In our experience, the parties to most mergers & acquisitions between accounting firms focus a lot of attention initially on clients, service mix, and billing rates during the initial stages of the process. |
Making 2+2=5 in a Merger Originally published by Accounting Today, October 2018 The real test in assessing a target firm for a potential merger or acquisition is evaluating how profitable the seller's practice will be once combined with the acquiring firm's operating environment. |
| The following article is part of a 12-part series originally published by Journal of Accountancy from July, 2013 to June, 2014 titled CPA FIRM SUCCESSION: SOLIDIFYING THE FUTURE View Entire Series |
Do's and Don'ts of Due Diligence Originally published by Journal of Accountancy, June 2014 Due diligence is the assessment of the legal, financial, and business risks associated with a merger or acquisition. It is totally appropriate and recommended that both parties involved in a transaction perform due diligence on each other, regardless of the deal's nature and whether you are buying, selling, or merging. |
| How to Maximize Client Retention After a Merger Originally published by Journal of Accountancy, April 2014 The retention of clients is essential to a successful merger of accounting firms. Most deals are structured so that the payments from the acquiring firm to the selling firm are based, at least in part, on the percentage of clients that stay with the post-merger firm during a specified retention period. |
Retaining Clients During a Firm Transition Originally published as a chapter in the eBook, Next Level Accountants: Your Guide to Growing a Firm of Trusted Advisors by Mary Ellen Biery. To download the complete book, visit Sageworks.com View Article |
| The Long Goodbye Originally published by Journal of Accountancy, August 2013 The best time for an accounting firm to start work on a succession plan is the day the firm is formed. Of course, most firms do not do that. The question in many cases has become: "How quickly can I put together a succession plan and head into retirement?" The answer depends on several factors. |