signals, sparks and strategies.
by marc rosenberg
how to bring in new partners
why would a cpa firm ever want to make someone a partner in the first place? why would it want to share profits with more people?
more: tell potential partners what it takes
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the short answer is that it must be beneficial to both the firm and the new partner. a win-win, as the saying goes.
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don’t forget to add what they could make.
by marc rosenberg
how to bring in new partners
accounting firms worldwide are dealing with an enormously difficult challenge today – one that has topped every firm’s list of critical issues since the turn of the century and will continue to be a high priority for years to come. the vast majority of firms struggle with it. failure to solve it causes hundreds of firms to merge out of existence every year.
more: what prospective partners should ask their firm | what new partners should know about buyouts | comp: what new partners don’t know
the “it” is, of course, succession planning, with difficulties rooted in a perfect storm of causes: read more →
if your people matter, show it.
by marc rosenberg
cpa firm mergers: your complete guide
when a cpa firm acquires or merges in a smaller firm, it is common for the seller’s staff to be employed by the buyer.
more: cherry-pick your merger partner | 34 steps to implement a merger | m&a: the six types of due diligence | why solo cpas need pcas | where mergers go wrong
in this situation, there are two very important documents to be executed between the buyer and the seller’s staff:
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it’s time to be realistic.
by marc rosenberg
cpa firm mergers: your complete guide
an aging seller who has no successors on staff has four possible exit strategies:
1. persist in eternally searching for smaller firms with bright young owners to merge in and eventually take over the firm. but ask yourself: why in the world would a young, successful firm want to merge with a firm that’s older than dirt? besides, every firm in the country wants to merge in a talented young firm. the competition is formidable.
more: cherry-pick your merger partner | 34 steps to implement a merger | where mergers go wrong | what your merger letter of intent needs | 61 things buyers should explore with sellers | 世界杯比赛名单 | one times fees isn’t the only way
2. continue the endless search for that young manager at a bigger firm who is disenchanted working at such a large firm and would jump at the opportunity to become a partner at your firm. ask yourself: why in the world would such a manager want to work for a small firm of old guys instead of joining a more vital, sophisticated firm with much more to offer?
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it’s ok to walk away.
by marc rosenberg
cpa firm mergers: your complete guide
for anything really important in your life, do you opt for the first choice that comes your way? did you marry the first person you had a crush on? how many jobs did you accept without checking out other opportunities? when looking to hire someone, did you interview only one person? do you make an investment without considering alternatives? i trust the answer to all of these is a resounding no.
more: 34 steps to implement a merger | m&a: the six types of due diligence | twelve tips for negotiating mergers | buying a solo | why merging in smaller firms is fabulous | 13 reasons to merge up | thinking merger? first ask why.
the same advice applies to mergers, whether you are a buyer or a seller. the more firms you talk to and negotiate with, the more expertise you acquire with the merger process. as the saying goes, “information is king.” more knowledge, information and experience are always better than less.
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your staff will be much more comfortable.
by marc rosenberg
cpa firm mergers: your complete guide
most firms find that it takes three to four years to fully implement a merger. but during the first few months after the merger’s effective date, there are quite a few administrative and procedural issues that need to be attended to immediately.
more: m&a: the six types of due diligence | why solo cpas need pcas | mergers: one stage or two?
most firms try to get as much of a head start as possible before the effective date.
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bonus: ten surprises at the end of negotiations that can threaten a deal.
by marc rosenberg
cpa firm mergers: your complete guide
the scope of due diligence will differ depending on the deal and should be tailored appropriately. the letter of intent issues, combined with the six areas outlined here, result in a comprehensive list of due diligence procedures that should serve the needs of most cpa mergers.
more: why solo cpas need pcas | where mergers go wrong | what your merger letter of intent needs | 61 things buyers should explore with sellers | 世界杯比赛名单 | one times fees isn’t the only way | four reasons to fear a merger
the six types of due diligence are financial and operational, clients and services, technical product and work quality review, personnel, risk management and legal.
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plus a worrying note on salaries.
by marc rosenberg
the rosenberg map survey: national study of cpa firm statistics
every year, we ask the industry’s top consultants to share their observations from cpa firms across the country. how do you think the next 12 months will unfold? and how would you assess the last 12 months?
more: outlook: private equity comes for accounting firms
here are my thoughts regarding 2023:
it’s a favor. treat it like one.
by marc rosenberg
cpa firm mergers: your complete guide
a practice continuation agreement (pca) is a written contract between a sole practitioner and another firm for the latter to take over the solo’s practice, either permanently or temporarily, in the event of a sudden, unexpected event (most commonly a health issue) that prevents the solo from working.
more: where mergers go wrong | twelve tips for negotiating mergers | buying a solo | why merging in smaller firms is fabulous | 13 reasons to merge up | thinking merger? first ask why.
logically, it would make total sense for every one of the 30,000 sole practitioners in the u.s. to have a pca in place. after all, solos have no partners to take their place, and in the vast majority of cases, their staff doesn’t have the skill level or the certifications needed to run the practice in the absence of the owner.
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be clear about their client base.
by marc rosenberg
cpa firm mergers: your complete guide
it’s fairly common for law firms to hire partners from other firms, a practice termed “lateral partner hires.” cpa firms do this but much less often.
more: where mergers go wrong | twelve tips for negotiating mergers | buying a solo | why merging in smaller firms is fabulous 13 reasons to merge up | thinking merger? first ask why.
the main reason for this difference is that law firms cannot legally have nonsolicitation or noncompete covenants in their partner agreements. most cpa firms do have such provisions, which severely restrict the movement of partners from firm to firm.
despite these nonsolicitation provisions, cpa firms do sometimes make lateral partner hires (lps). there are several variations:
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don’t be rushed by deal fatigue.
by marc rosenberg
cpa firm mergers: your complete guide
few cpas enjoy the due diligence part of a merger. it’s like proofreading legal agreements or going back to our school days when we had to double-check our answers before turning in a test.
more: mergers: one stage or two? | what your merger letter of intent needs | 61 things buyers should explore with sellers | 世界杯比赛名单 | thinking merger? first ask why.
by the time due diligence begins, the parties have usually reached a handshake agreement on the deal terms and decided they want to merge. due diligence is a process that confirms a decision that, for the most part, has already been made. it’s like checking references after you’ve interviewed someone and decided to make the hire.
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plus: guarding against deal fatigue.
by marc rosenberg
cpa firm mergers: your complete guide
after you’ve identified a merger partner.
after you’ve convened a get-to-know-you meeting.
after you’ve exchanged financial and production data.
after you’ve received letters of intent,
more: mergers: one stage or two? | what your merger letter of intent needs | 61 things buyers should explore with sellers | 世界杯比赛名单 | one times fees isn’t the only way | four reasons to fear a merger
… now you’re ready to get down to business! it’s time to begin arguably the most critical of the dozen or so major steps in the merger process: negotiating the deal. read more →
when each is most common.
by marc rosenberg
cpa firm mergers: your complete guide
after settling financial and operating issues, we turn to two-stage vs. one-stage mergers.
more: buying a solo | 23 questions for mergers of equals | selling your firm? what to expect | one times fees isn’t the only way | four reasons to fear a merger
in the end, it’s all about the math.