Buying an accounting firm during tax season smart move or headache? - Searchfunder

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by a searcher from Northeastern University
in New York, NY, USA

4mos ago

Buying an accounting firm during tax season smart move or headache?

Looking at firms in the $125K–$600K SDE range and curious about the tradeoffs at this size. A few questions for the group: 1/How did you structure your first accounting firm acquisition – seller financing, SBA, seller forgiveable notes? 2/ For those who did asset sales only on their first deal, how did you make that work? 3/Any recommendations for buyer-side advisors or brokers who specialize in accounting firm acquisitions? Would appreciate any insights from folks who've been through it.

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reply by a searcher 4mos ago
from New York University in Miami, FL, USA

My business partner and I closed on an acquisition this past December. Operationally, we went in knowing that he still needed to run a full tax season at another firm he owns (with plans to sell that firm after April). Our strategy has been to elevate a senior staff member to run most of the tax season at the legacy firm. I would also say our partnership overall gives us flexibility to cover the new business as needed, while he may sometimes need to deal with issues at the legacy firm. That said, any acquisition comes with more learning curves and unplanned calls than you initially expect. I wouldn’t discount the time required to meet new staff, connect with high-priority clients, and truly learn how to replicate the deliverables clients are accustomed to — before you even begin evolving the quality and scope of the work. We funded the deal with an SBA loan at 10% down and structured it as an asset sale. While we didn’t use counsel that specializes exclusively in accounting firm acquisitions, we did work with professionals who had meaningful deal experience. In my view, the most important factor is surrounding yourself with people who have done volume. Our broker, for example, has about 10 years in the industry but deal flow comparable to what many brokers see in 20+ years. Lastly, accounting firms typically have strong margins, and banks love this space. You’re playing in one of their favorite sandboxes, use that leverage.

reply by a searcher 4mos ago
from Stanford University in Sausalito, CA 94965, USA

Generally speaking, not the best time to buy it. We closed in late october ona tax firm and even that felt rushed. But we were replacing a retiring owner, so if you're doing a deal where owner is rolling over, a little easier I have done 3 deals. All a combo of SBA, seller debt, and cash. seller debt has been between 20% and 50% of the purchase price, with principal (and interest) offset provisions on the seller debt based on revenue retention (1-2 years). Sometimes you can get key team retention as well I did a stock deal on deal 1 No recs on brokers...all 3 deals have been direct. A lot of the broker stuff I've seen is very aggressive pricing, not enough time for DD, etc. Hope this helps!

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