MERGERS & ACQUISITIONS

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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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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Plus thirteen questions to ask.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

The smaller firm in a proposed merger should make an objective, realistic assessment as to whether or not merging upward is a good business decision.

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Every small firm evaluating the feasibility of merging should consider these questions in as much depth as possible:

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Plus 16 reasons it causes anxiety.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

While selling to a larger firm may ultimately be the most viable succession plan available to a small firm, the prospect of the merger creates a great deal of anxiety among small firms nonetheless. The larger firm’s sensitivity to these concerns is critical for a successful meeting of the minds during the negotiation phase.

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Why Small Firms Are So Anxious about Merging Up

1. Loss of control, loss of control and loss of control
2. Loss of their job or a substantial reduction in their role. It’s possible that some of the smaller firm’s partners may not be invited to be partners in the new firm.

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Plus 23 issues to negotiate.

By Marc Rosenberg
The Rosenberg Practice Management Library

These questions can be explored via interviews or group sessions. But they are all great questions that will give insight into each firm’s culture and personality.

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1. Why do the firms really want to merge? After the merger, will the firms have the commitment and wherewithal to realize their expectations? Acid test: If some of the main reasons for doing the merger are clearly not realized 12 months later, which issues and failures would make you the most upset and frustrated?
2. How would the new firm be better than the sum of the two individual firms?

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