12 Reasons to Merge In a Smaller Firm

Silhouetted figures against US outline mapFrom buying talent to expanding territory, mergers can be fast ways to grow.

By Marc Rosenberg

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

MORE ON MERGERS: 20 Terms to Settle When Merging Up | 3 Factors That Always Affect Negotiations | Mergers: Assessing Compatibility | Case Studies Reveal Potential LOI Issues | One Times Fees Is a Steal! | Looking to Grow Your Firm? How to Find a Seller in Four Steps | 14 Keys to a Successful Merger | 5 Steps to Take Before Merging

My guess is that in excess of 90 percent of all CPA firms would answer this question with a resounding “yes!”
READ MORE →

20 Terms to Settle When Merging Up

Green checks being made on checklistWhat the smaller firm needs to determine. They get a say, you know.

By Marc Rosenberg

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:

MORE ON MERGERS: What to Expect When Merging Up | 13 Questions to Assess an Upward Merger | Mergers: Assessing Compatibility | 14 Provisions to Include in a Letter of Intent | Want to Merge? Ask for Data | Merger Prep: Getting to Know You | Plant Seeds to Turn Up Merger Candidates | 13 Ways to Screw Up a Merger

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?
READ MORE →

19 Surprises When Merging Up

man woman handshake shake hands iStock_000010387373SmallBONUS CHECKLIST: What smaller firms need to know.

By Marc Rosenberg

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

MORE ON MERGERS: Mergers: Assessing Compatibility | What to Discuss at the First Merger Negotiation Meeting | Case Studies Reveal Potential LOI Issues | Merger Prep: Getting to Know You | One Times Fees Is a Steal! | 13 Ways to Screw Up a Merger

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:
READ MORE →

3 Factors That Always Affect Negotiations

Hand drawing a rainbow-colored 3BONUS CHECKLISTS: 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:

MORE ON MERGERS: What to Discuss at the First Merger Negotiation Meeting | 14 Provisions to Include in a Letter of Intent | Want to Merge? Ask for Data | One Times Fees Is a Steal! | Looking to Grow Your Firm? How to Find a Seller in Four Steps | 15 Can’t-Skip Merger Terms to Decide | 14 Keys to a Successful Merger

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.
READ MORE →

13 Questions to Assess an Upward Merger

puzzle arrow dollar photoBONUS CHECKLIST: 13 ways to make your firm an attractive candidate.

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.

MORE ON MERGERS: Mergers: Assessing Compatibility | What to Discuss at the First Merger Negotiation Meeting | 14 Provisions to Include in a Letter of Intent | Case Studies Reveal Potential LOI Issues | Want to Merge? Ask for Data | Merger Prep: Getting to Know You | The Merger Process in 21 Steps | Looking to Grow Your Firm? How to Find a Seller in Four Steps | 13 Reasons Accounting Firms Merge | Mergers 101: When Negotiations Aren’t Really Negotiations | 5 Steps to Take Before Merging

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

READ MORE →

Dealing with the 16 Reasons Merging Up Causes Anxiety

Businessman with head in hands

BONUS CHECKLIST: 12 benefits.

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.

MORE ON MERGERS: Mergers: Assessing Compatibility | What to Discuss at the First Merger Negotiation Meeting | What to Ponder Before Issuing a Letter of Intent | Want to Merge? Ask for Data | Merger Prep: Getting to Know You | Looking to Grow Your Firm? How to Find a Seller in Four Steps | 13 Ways to Screw Up a Merger

Why small firms are so anxious about merging up
READ MORE →

2016 Outlook: No End to Mergers in Sight

2016-ROUNDTABLE-OUTLOOK-FOR-ROSENBERG-MAP-COMMENTARY-VF-240x219A buyer’s market is on the horizon.

They say “past results are no indication of future performance.” Maybe. Maybe not. But if anyone should know, it’s our panel of experts, their comments drawn from the new edition of The Rosenberg MAP Survey. These are their bullet points and comments, verbatim, looking back at the last 12 months and looking ahead to 2016. – Rick Telberg, CEO

By Gary Adamson
Adamson Advisory

Lessons from 2015:

Merger mania continued over the last year for several reasons:

  • continued slow post-recession organic growth,
  • thousands of baby boomers with no internal succession plans in place and
  • competition heating up for middle-market clients (the big firms want our biggest and best clients!).

MORE FROM THE ROSENBERG MAP SURVEY: Why Outsourcing Beats Unicorn Hunting | 2016 Battleground: Aging Leaders vs. Emerging Leaders | Private Clouds on the Rise | Firms Growing, Still Face Talent Challenges | Outlook 2016: Another Economic Storm Coming? | How Succession Issues Are Driving Desperation Mergers | Outlook 2016: Change Catches Up with Auditors | Strategic Plans Undermined by Out-of-Control Partners | Growth, Succession Plans Critical for Firms | Talent Wars Go from White Gloves to Boxing Gloves | Trend Outlook 2016: Change Agents Needed

Firms are improving profitability with per-partner income rising while the talent wars that we saw pre-recession are returning.
READ MORE →

8 Questions That Staff Ask In a Merger

Group of businesspeople hiding their faces behind question mark signs at officeAnd 6 steps to handling the process.

By August Aquila

To get your employees’ commitment to a merger, they must understand how it impacts them personally and see the opportunities for themselves.

MORE ON LEADERSHIP FOR PRO Members: Does Your Dashboard Need Fine-Tuning? | 6 Practical Ways to Innovate | 8 Ways Leaders Destroy Firms | The 4 Best Ways to Use Your Senior Partners | How to Tell a Culture Change Is Due | Today’s Top 6 Partner Compensation Trends | Why Your Firm Should Be a Republic | Partnership Is About Persuasion | How to Build a Growth-Centric Pricing Strategy | How to Combine Two Firms after Merger: Carefully

Let’s assume that the announcement for the upcoming merger or sale is handled properly. In other words, it was not leaked or there were no rumors on the street. You can be sure that once the announcement is made, employees start thinking about one thing – How does this event affect me? This is about self-preservation; it’s an emotional and psychological question that everyone will ask themselves.
READ MORE →

Mergers: Assessing Compatibility

Overhead view of people solving a large jigsaw puzzleBONUS CHECKLISTS: 8 questions to answer and 23 issues to negotiate.

By Marc Rosenberg

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.

MORE ON MERGERS: What to Discuss at the First Merger Negotiation Meeting | 14 Provisions to Include in a Letter of Intent | Case Studies Reveal Potential LOI Issues | Want to Merge? Ask for Data | The Merger Process in 21 Steps | 13 Ways to Screw Up a Merger | 15 Can’t-Skip Merger Terms to Decide | 14 Keys to a Successful Merger | 13 Reasons Accounting Firms Merge | Mergers 101: When Negotiations Aren’t Really Negotiations | 5 Steps to Take Before Merging

  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?
  3. Do both firms share a similar vision for what the firm should look like in five years? Growth, services offered, specialties desired, industries served, number of offices, etc.?
  4. Do you share similar values? Values include things like how billable a partner should be, how important it is for a partner to follow the rules, the importance of being a business-getter, how staff are treated, work ethic, etc.
  5. Each firm should tell the other the following:

READ MORE →