Is it time to sell a practice? You have many questions to answer when looking to merge or sell your CPA firm. Personal and business considerations come into play. If you plan, you can feel confident and realize the value of your firm.
How Long Does it Typically Take to Sell a Practice?
There may never be an absolute right time to sell a practice. You have to consider many variables and make the best decision to answer the question, “when should I sell my CPA firm?”
Here are some key factors:
• Work load – Are you working long hours with the feeling of no support?
• Age – Someday, you will sell or potentially close your practice. At what age do you plan to retire as you balance your goals and demands?
• Family – Have you put everything into your practice and now want to spend more time with family?
• Financial – Are you financially where you want to be and where you plan to be in five years? It may make sense to plan a future sale date.
• Uncertain future – Does your future contain a high level of uncertainty?
Changing Business Environment
Practice operations change and client service needs can become more involved. Clients may have the need for services that a larger firm can offer them.
Furthermore, as the competition increases, retaining your key employees can become more challenging.
Frequently Asked Questions When You Want to Sell a Practice
Q. What factors will go into determining the value of my firm?
A. Factors that will help determine the value include: client base, profitability, types of services, technology investment of the firm, employee retention, and billing rates.
Q. How long will it take to sell my CPA firm?
B. Typically, the larger the firm, the longer it takes to sell. Smaller firms can sell in three to six months. Larger firms can take nine months or longer to sell. Firms in rural areas could take longer to sell as there may be fewer buyers.
Q. What types of buyers will be interested when I sell my CPA firm?
A. Younger professionals looking to expand their practice may be interested in an instant client base. Larger firms purchase CPA firms to grow their business, geographically diversify, or expand their services. You can position yourself to find the best buyers for your firm.
Q. What should I tell my client base?
A. You don’t necessarily have to tell your clients until the sale is final. Informing clients earlier could cause them to leave which could reduce the firm’s value. When you inform your clients, giving them confidence in the new owner is your primary objective.
Q. When should I tell my employees?
A. Your personal circumstances will contribute to your decision. You want to strike a balance between not informing them too early or too late. If you can keep it confidential until you have a signed offer, potentially inform your staff then. You want to retain your employees as they have the skills and client base knowledge.
Q. Do I need an attorney?
A. When you sell a practice, you will want to hire an attorney. Your attorney can prepare and review the documents to ensure the transaction addresses the proper points and meets the legal requirements.
What to do Next
Professional firms, such as Fusion CPA, are interested in acquiring CPA firms. We are experienced in the process and can easily walk you through the process in an organized manner. We can answer questions and proactively provide guidance based on our experience in similar acquisitions. Click the button below to get our advice.
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