As another tax season nears a close, a lot of tax and accounting practice owners will start asking the questions, "Was this my last tax season?" Selling your accounting practice generally takes some time. We estimate that smaller firms grossing less then $250k typically sell in a 3 to 6 month period. Larger firms including million dollar firms, this can take upwards of 6 to 12 months. There are a variety of reasons that is you are considering selling your tax or accounting practice, now is the time.
Starting the process early will allow ample time to complete the deal and get the new buyer in place prior to next year's tax season. This may sound like a stretch since it is on April 1, but this is no April's Fool joke. You first have to find a buyer who is not only qualified professionally, but is also qualified financially and will be a good fit for the practice. If outside bank financing is needed, this process can take around 4-6 weeks. If the buyer is approved, you will still want the final purchase agreement to be approved by your attorney. Attorney's going back and forth with changes, corrections, etc can take weeks as well. The next think you know it's August. Well, what if your buyer doesn't get financed or the attorneys can't agree? This means you have spent weeks and maybe months on the wrong buyer and have wasted valuable marketing time in the process. There is still time. In fact, we listed a practice last year in December and closed in early January.
Most accounting and CPA practices will sell in the fall or later but before the height of the next tax season. Buyers need to be able to transition into the new location with time to get acclimated to the software, working environment and staff. Transitioning the new buyer into the new practice is of utmost importance. Can you imagine if you close on the deal and the seller hands you the keys with his or her bags packed and they say "So long and good luck!" I don't think this is going to work out well for anyone, not the clients, not the staff and most importantly not the buyer. The buyer has invested a significant amount of resources into buying the business and they deserve the opportunity for success. Having the seller transition the client base to the new buyer will help in the overall success of the practice. We advise all of our clients and all of the future seller's out there to help your buyer after closing. We advise all buyers to make sure the seller assists with transition after the sale. We have heard multiple horror stories from buyers where the seller up and leaves and the buyer is left with half of what they thought they were buying. This impacts cash flow of the business which can make the buyer late or even default on a loan. Selling the practice during the fall and having the seller transition during this time and be available during the upcoming tax season is the most productive way to transition the client base and ensure the success of the practice.