Is Buying an Existing Accountancy Firm the Right Option for You?
Whether you’re a new accountant who wants to work as their own boss, a salaried accountant ready to branch out, or a firm trying to expand, you always have the option of buying an existing firm. Not everyone likes the idea of having to sell their services and instead want to focus on what they do best. In this case, buying an accounting firm could be a great choice. However, you have to be aware of the not always apparent drawbacks of buying someone else’s business. Let’s take a look at some of the pros and the cons of buying an accountancy firm.
Instantly Increase Your Client Base
The biggest benefit of acquiring someone else’s practice is that you get instant access to their client base. However, you have to know if the client base warrants the price you’ll be paying for the firm first. Look at more than the number of clients a firm has. Things like the average age of the clients may seem like a small detail for you, but there is a difference between a base consisting mainly of senior clients and one made up of young high earning professionals with plenty of years of active working life in front of them. Other things to look for include assets, annual revenue, tax returns, and the service the firm offers, among others.
This is why you should consider working with a brokerage team that will give you access to a large database of practices and gives you a clear snapshot of a firm’s financials. If you’re looking for top accounting practices for sale, POE Group Advisors is a great place to start. Going with a broker will make the due diligence process much easier and will greatly facilitate your search.
Be Prepared for Surprises
One thing you should know when acquiring practice is that there’s no guarantee that the relationships the firm built with their clients will transfer over to you. The clients might not like the rapport they have with you or your staff and decide that they don’t trust you with their money. And nothing is stopping them from going elsewhere. Not only that, but some of the employees of the firm may not like you either. Or maybe they don’t like the new set of procedures you’re trying to put in place. This means that you might end up having to scramble to find both new clients and staff.
Hit the Floor Running
If this is your first time working independently, there are many benefits to buying an existing firm. Not only will you gain clients, but you’ll also have equipment and processes set up for you. You will also benefit from the firm’s marketing and branding work. You’ll be able to work out a financing agreement too, which means that you can start earning a profit almost immediately as long as your profits are higher than your financing cost plus overheads.
These are all things you have to take into consideration when thinking about buying an accountancy firm. Your decision will eventually boil down to your objectives, how much money you’re willing to invest, and how long you are willing to wait to see results.