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It’s time to get to know each other.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

All merger discussions have to begin somewhere. After merger candidates have been identified, there obviously needs to be an initial meeting for the two firms to get acquainted.

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Everything is confidential and informal. No exchange of financial statements. The two parties simply spend an hour or two – you guessed it – getting to know each other. Many firms like to convene this meeting over breakfast or lunch because meeting at a restaurant gives the encounter an air of informality and sociability. Other firms like to do this in the larger firm’s office so that the smaller firm can get a “house tour.”

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Do the math. You might be surprised.

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 is worth one times fees; however, like many “rules of thumb,” this notion is often incorrect.

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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 because they feel that the asking price is too rich.

The purpose of this article is to demonstrate that buying a small firm for one times fees is a steal (for the buyer). In fact, it’s still an outstanding investment at a premium price, say, as high as 1.3 times fees. Let me illustrate.

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PLUS: The proper process in 21 steps.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

It’s important to understand the flow of the entire merger process.

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Every merger has its unique aspects. It’s impossible to choreograph, from A to Z, exactly how the process for all mergers will work. The steps in the process listed below appear in the order of how they commonly occur.

But again, because all mergers are different, the flow of the steps might vary from merger to merger.

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Never stop looking.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

Firms that are serious about merging in smaller firms on a regular basis understand that doing mergers is all about planting seeds. A buyer has to have this attitude:

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Every day of every year, at least one firm decides to test the merger waters. If our efforts to identify sellers are made continuously throughout the year, every year, sooner or later, we will find at least one interested merger candidate and probably more than one.

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