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MERGERS & ACQUISITIONS

Why Solos Need Practice Continuation Agreements

Woman and man shaking hands across a desk
It’s a favor, so negotiate generously.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

A Practice Continuation Agreement (PCA) is a written contract between a sole practitioner and another firm for the latter to take over the solo’s practice, either permanently or temporarily, in the event of a sudden, unexpected event that prevents the solo from working, most commonly a health issue.

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Logically, it would make total sense for every one of the 30,000 sole practitioners in the U.S. to have a PCA in place. After all, the solo has no other partners to take her place and in the vast majority of cases, the solo’s staff doesn’t have the skill level or the certifications needed to run the practice in the absence of the owner.
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MERGERS & ACQUISITIONS

How to Merge Two Solo Accountants

two men standing and shaking hands

A list of 21 issues to consider.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

When considering a merger of sole practitioners, there are numerous critical issues to negotiate. Twenty-one, in fact.

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1. Method/system for splitting the profits. Keep in mind that if you devise a system that essentially revolves around making each solo a profit center, as if they still had their own firms, it will tend to discourage the two of you working together as one firm.
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MERGERS & ACQUISITIONS

Thirteen Things to Ask in a Merger of Equals

Overhead view of 4 hands putting together 4 puzzle pieces

How about an executive committee from both firms?

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide 

Mergers of equals or firms close to equal (some call these sideways mergers) are much less common than mergers in which there is a clear survivor. But they do occur.

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Quite simply, there are two reasons mergers of equals are uncommon:
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MERGERS & ACQUISITIONS

Merging in a Smaller Firm: 33 Questions to Ask

Young businesswoman using smartphone and tablet at outdoor cafe

BONUS: a telephone screening form.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

Even though these questions are primarily intended for larger firms to ask smaller firms, some of the questions may be appropriate for the smaller firm to ask larger firms. These are general questions; based on your review of the other firm’s data, you will certainly have specific questions to ask in addition to those below.

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An important goal of these interviews is to get open, honest and brutally candid responses. At most firms, this is virtually impossible if you interview two or more partners together. Only rarely, where two or three partners appear to be “joined at the hip,” is it acceptable to do group interviews.

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MERGERS & ACQUISITIONS

Eighteen Stumbling Blocks to Merging in Smaller Firms

Man rubbing his eye and holding glasses while looking at computer with notes stuck to side

Fortunately, they all can be overcome … if everyone is willing.

By Marc Rosenberg
The Rosenberg Practice Management Library

Though not universally true, larger firms will find many aspects of smaller firms to be below their own standards.

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The questions that the acquiring firm needs to ask are:

  • How severe are these weaknesses?

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MERGERS & ACQUISITIONS

Twelve Great Reasons to Merge In a Smaller Accounting Firm

Silhouetted figures against US outline map

Obtain a niche, acquire talent and more.

By Marc Rosenberg
The Rosenberg Practice Management Library

If an opportunity to merge in a smaller firm were presented to you, would you be interested in pursuing it?

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My guess is that in excess of 90 percent of all CPA firms would answer this question with a resounding “yes!”
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MERGERS & ACQUISITIONS

Merging Up? Settle These Twenty Items

green marker checking boxes

 

The smaller firm gets a say, so decide what you want.

By Marc Rosenberg
The Rosenberg Practice Management Library

When a small firm considers merging upward, they listen to the terms offered by the larger firm and decide whether they can accept them. Through a combination of face-to-face meetings, negotiation sessions, telephone calls and review of materials, the seller should be comfortable with each of the following:

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1. Hopefully, you have identified the problems and the goals you have for the merger (retirement, access to staff, technical expertise, management capabilities, etc.). Do you see each of these problems and goals actually being addressed and resolved with the merger?
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MERGERS & ACQUISITIONS

Nineteen Things to Expect When Merging Up

Smaller firms should be prepared.

By Marc Rosenberg
The Rosenberg Practice Management Library

The degree to which merger terms are negotiable is often determined by the relative size of the two firms.

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Generally, the larger the gap in firm size between buyer and seller, the fewer the items are open to negotiation. This can be illustrated by the following chart:
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MERGERS & ACQUISITIONS

Negotiating a Merger? Remember These Three Factors

Hand drawing a rainbow-colored 3

BONUSES: Smaller firm to larger, 25 questions to ask and 17 data points to request.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

There are always three intangible factors that greatly influence the extent to which merger terms and issues are negotiable:

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1. Negotiation ability of each firm. Some people are “tough” negotiators, continuously trying to impose their will on the merger partner, while others are more malleable and tend to go along with whatever the other side wants.
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