3 Ways I De-Risk Client Attrition

As someone who’s acquired 4 accounting firms so far, I know what your worst nightmare is. It’s buying an accounting firm and then watching all the clients walk out the door. When I bought my 1st firm, I couldn’t afford to screw this up. I bet my family’s future on it. That’s why I built in 3 safeguards that make client attrition almost impossible. This structure works for accounting firms, and I would guess it will also work for most other service-based, client heavy type of industries. 1. A Meaningful Seller Note 20–30% minimum. (I’ve done a couple 100% and a 70%.) If you take nothing else from this post, hear me on this. Never pay 100% to seller upfront. When the seller has skin in the game, they care about keeping clients around. The bank knows it. I know it. You should too. 2. A Forgivable Note Tie the seller’s payout to revenue retention. Example: Buy a $1M firm. If revenue drops below 90% in year one, their seller note shrinks dollar for dollar. You’ll be amazed at how motivated they are to keep clients from leaving. 3. Seller Stays On Set the expectation early. They stick around at least one tax season, ideally two. If an owner wants to throw the keys at you and run, that's a red flag. We don't need them full time. Outside tax season, 2 days a week. In tax season, 40hrs/week. It’s the perfect balance of client handholding and endorsement transfer. Put these in your deal and you’ll sleep like a baby instead of waking up wondering which client just left. Feel free to message or email me with questions. It’s accrual world ;) But we are better together