Selling Your Texas-Based Accounting Firm

Are You Looking to Sell Your CPA Business?

Are you a certified public accountant who is looking to retire and sell your accounting firm in the next five years?

If so, you’re in the same boat as 75 percent of your Baby Boomer peers in the American Institute of CPAs. As a result, the number of firms for sale could outpace demand, creating a competitive buyer’s market.

No business owner should put themselves in this position, so close to retirement and desperate for a buyer. If you want to avoid selling your CPA firm for significantly less, start planning an exit strategy now.

Surveys show that up to 40 percent of Baby Boomer CPAs are vaguely planning to retire in the next five years, exiting the business in their 70s.

About 50 percent plan to retire at age 70 and 16 percent plan to wait till age 75 or older. However, the risk of pushing back a sale of the practice is being forced into a quick retirement by medical or family events, which limits selling options.

You can counteract these variables by starting your exit plan now. That way, you can control the timing and sell your Texas-based CPA firm for maximum profit.

Successful senior

Why Sell Now?

Even though Baby Boomers are poised to exit the accounting sector in record numbers, the field is still projected to grow at 4 percent, on pace with all other occupations, through 2029.

Baby Boomers will overwhelmingly be looking to exit for legacy planning, retirement or to sell to family. Additionally, you may be eyeing a merger with a competitor — or maybe you want to sell but also stay on as an independent consultant or CPA for a few years.

Your business is likely family owned with a local roster of clients, which also means your target buyer will likely be local (perhaps a competitor in the same city).

For instance, two local accounting firms recently merged in Abilene. Ray & Company, P.C., which was founded in 1971, became part of Condley and Company L.L.P., founded in 1939. The two firms together now boast a range of full-service tax, accounting and consulting services.

And although retirement may be your No. 1 reason to leave your firm, you should be flexible on dates to ensure that you do not leave money on the table.

Say, for instance, a buyer is willing to pay top dollar in six months. But you decided you want to retire in two years. If you pass up the offer to stick to your original retirement date, you could be losing money in the long run. Sell while the market is peaking, not when you arbitrarily set a date.

Along those same lines, yearly timing is important, too. You’ll want to avoid selling during tax season. This season is busy for you, and it’s also busy for your buyers, who are looking to merge, scale or grow. So a transition during this time might make things even more chaotic.

Likewise, don’t sell during your least busy time of the year or when you have poor cash flow.

Consider selling your practice just before tax season, or whatever may be your most profitable time of year, to help the buyer hit the ground running.

The majority of CPA businesses sell and transition between August and February.

How to Sell

Accounting and CPA firms are unique because the real value is in the book of accounts, active client list and the expertise of the staff.

So how do you determine what your Texas accounting firm is worth?

Valuation comes down to various equations that take into consideration your finances, market conditions and industry comparisons.

You might’ve heard that accounting firms sell for one times annual gross, but this isn’t always the case. Location, clients, staff and profitability all count toward your company’s unique valuation.

One of the biggest detriments to a sale is if an accounting firm is controlled by a single owner or partner and is hopeless to run without them. Buyers seek out firms that have good teams and delegation systems.

On the other hand, a small practice with a sole owner can also be appealing to larger buyers because it’s easier to transition a small staff and small client list.

The biggest hurdle you’ll have for fetching a high price for your firm is client retention.

Most deals are contingent in some capacity on collections over a certain time period based on client retention revenue, in most cases 2-5 years. If the firm loses clients, the annual collections go down. If it gains clients, the collections go up. Therefore it’s in your best interest to groom your clients for the sale and ease any worries they might have about the transition.

At the end of the process, you will have a potential buyer list. Choosing the right one will be up to you. Experts say to keep in mind the Four C’s in this case:

  1. Chemistry: Choose a buyer you’re comfortable with.
  2. Culture: Make sure your buyer’s in tune with your staff and company culture.
  3. Capacity: Can the buyer handle your business? Do they have the skills, resources and bandwidth to absorb your business?
  4. Continuity: Will you be able to help transition your clients? Will the buyer be transparent and accommodating to your clients and help retain them? Clients do not like change. How will the buyer help alleviate that stress?
Calculating business expenses

Why Hire DBG Advisors to Sell Your Accounting Firm or CPA Business

At DBG advisors, we are determined to find the right path for your Texas company’s lucrative exit. We take this responsibility seriously by walking you through the entire process.

As an accountant, you are adept at business — but you probably aren’t 100 percent sure how to price, market or sell your practice. We can help you decide timing and pricing. We can also position your firm to impress buyers.

What Sets DBG Advisors Apart

  • Connections within the North Texas business community and in larger Texas markets
  • Ability to market Texas businesses to other buyers within larger cities of Texas and even assist in out-of-state mergers and acquisitions
  • Specializing in: Accounting Firms and CPA Businesses
  • Understanding and responding to the specific reasons you have for selling your Texas business, including as part of an exit plan, looking to retire comfortably, looking to move, selling a business in order to expand and grow, etc.
  • We are experts at getting businesses sold for top dollar. So if you’re ready to sell your Texas-based accounting or CPA business, contact us today to get started on an exit plan.
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801 E Campbell Rd, #250L
Richardson, Texas 75081
(972) 200-0991

(325) 244-6300

DBG Advisors is a BBB Accredited Business Broker in Richardson, TX
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