Acquiring Majority Owner of CPA / Accounting Firm as Non-CPA

February 02, 2023

by a professional from San Jose State University in Redwood City, CA, USA

I'm exploring the regulations for one of my entities to be the majority owner of a CPA firm.

Since I'm not a CPA, we would need to structure the company as a Alternative Practice Structure (APS).

Does anyone have any direct experience with this?

0 Likes

17 Replies

187 Views

Replies

Reply by a professional
from The University of Texas at Austin in Austin, TX, USA

hey, I am doing this now. I've looked at over 266 accounting firms nationwide with a minimum SDE/EDITDA of about 500,000 and a minimum revenue of about 1 million. Whether or not someone goes down this path I think depends on what your vision is for the business. I see taxes as medicine. people get their taxes done because they don't wanna go to jail but they need to bookkeeping, cash flow management control, or services CFO services. I see those vitamins. I also have strong opinions about how you scale this business and address the pain points that customers face. And national challenges in the industry. I would be interested in buying an accounting and finance (vitamin) company but when you look in the accounting industry, most of what's out there is CPA firms. If you have enough business experience and you can figure out how to staff the team so there is a CPA to do the necessary work, this is possible. I am doing it right now. As some people mentioned, the biggest challenges are that CPA firms typically don't have a very good business model. They have one person, the owner, who knows stuff and has a client relationship and works 60 hour weeks. So they need the buyer to basically replace that job. Those are not the ideal firms to buy unless you already have a CPA that you were planning to either hire. With all that said, if you're dead, set on buying a CPA firm, it is totally possible. You can't overcome the objections that you'll get from the broker and that you might get from the owner. The biggest objections come from the broker but once you learn how to overcome those, it's fairly easy. The more firms you look at, the more you learn the types of work that you don't want your ideal company to do. The more you also realize the CPA name isn't necessary for most companies to operate. It's just how the industry has worked. So you can have a firm that provides most of the services a small to medium size business needs and not be registered as a CPA firm and that be perfectly fine and profitable

Reply by a searcher
from Indian School of Business in Raleigh, NC, USA

As a non-CPA, I looked at some of these kinds of deals and quickly realized that most firms do anything and everything for their clients in a small geographic area. The partners add a lot of knowledge value and their clients and subordinates rely on the owners for the advanced/technical accounting issues.

It would be hard for a non-CPA to come up to speed on so many different services for so many different industries. But there are a few cloud-based accounting firms that focus on narrow market niches (e.g. middle sized real estate brokers). These deals are hard to find but seemed better suited to scaling the learning curve and competing effectively as a non-CPA...

+15 more replies.

Join the discussion