Check the math.
By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide
Partners in accounting firms are familiar with the rule of thumb that a CPA firm’s goodwill (excluding capital) is worth one times fees. However, like many rules of thumb, this notion is often incorrect.
MORE: Thinking Merger? First Ask Why. | Why Do You Want to Merge? Be Honest. | Four Reasons to Fear a Merger
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When buyers begin to think about how much they will pay for a smaller firm, they often have this one-times-fees notion in the back of their minds. Then, when sellers are bold enough to ask for a price in excess of one times fees, buyers often balk.
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