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
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in the end, it’s all about the math.
bonus: a 19-point checklist for sellers.
by marc rosenberg
cpa firm mergers: your complete guide
note: this post was written in collaboration with attorney peter fontaine, the founder and managing partner of newgate law, a firm of lawyers that work with cpa firms exclusively. he served as legal counsel at arthur andersen and rsm for more than two decades. he can be reached at pfontaine@newgate.law or (617) 513-2440.
at the onset of the merger process, most sellers contact at least two to three potential buyers. this positions the seller to select one buyer to commence negotiations with, in earnest.
more: buying a solo | 23 questions for mergers of equals | 61 things buyers should explore with sellers | why merging in smaller firms is fabulous | selling your firm? what to expect | 世界杯比赛名单
after an exchange of financial and operating data and meetings to clarify the information, but before serious negotiations begin, it is customary for the qualified buyers to issue letters of intent (lois).
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what to negotiate, plus key operating and financial issues.
by marc rosenberg
cpa firm mergers: your complete guide
the approach to orchestrating a merger differs depending on the nature of the transaction. is there a true survivor? in substance, not form, is the deal more an acquisition than a true merger?
more: 23 questions for mergers of equals | 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
when a sole practitioner is the seller, virtually all deals are true acquisitions. solos intend to retire in just a few years. their primary focus is on the negotiation of financial terms, such as the purchase price, payout term, down payment and compensation for the time they work. issues related to the operation of the buyer are generally of minor importance to the solo. in other words, when a buyer acquires a retirement-minded solo, the transaction is fairly simple and straightforward.
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what do you want, and who will manage getting there?
by marc rosenberg
cpa firm mergers: your complete guide
mergers of equals or firms close to equal (some call these sideways mergers) are much less common than mergers in which there is a clear survivor. but they do occur.
more: 61 things buyers should explore with sellers | why merging in smaller firms is fabulous | 13 reasons to merge up | thinking merger? first ask why.
there are two reasons that mergers of equals are rare.
first. mergers of equals are much more difficult to negotiate. in traditional mergers where there is a clear surviving firm, the buyer is in a strong position to dictate the deal terms and governance policies, and the seller respects this.
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everything from reporting to décor.
by marc rosenberg
cpa firm mergers: your complete guide
here we list 61 issues with mergers and acquisitions, and additional items will undoubtedly arise on a case-by-case basis.
more: why merging in smaller firms is fabulous | selling your firm? what to expect | merger? the 100 data points you need first | why do you want to merge? be honest.
if a buyer pursued every one of these issues, it could take years to negotiate the deal and would ensure severe deal fatigue. so as you review this list, prioritize what issues are most important and customize these questions to the seller’s unique situation.
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eleven reasons to do it.
by marc rosenberg
cpa firm mergers: your complete guide
if an opportunity to merge in an attractive smaller firm was presented to you, would you be interested in pursuing it?
my guess is that at least 90 percent of all cpa firms would answer this question with a resounding yes! (and a healthy percentage of the remaining 10 percent perform at such high levels that they cannot conceive of merging in a smaller firm whose performance falls well below their own high standards.)
more: selling your firm? what to expect | 世界杯比赛名单 | 13 reasons to merge up | merger? the 100 data points you need first | one times fees isn’t the only way | thinking merger? first ask why. | why do you want to merge? be honest. | four reasons to fear a merger
why is this? the short answer is that it’s a great deal, both financially and operationally. it’s an almost can’t-lose proposition, as long as you do it right.
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down payment? unlikely.
by marc rosenberg
cpa firm mergers: your complete guide
we’re talking about mergers of accounting firms and turning to specifics the seller should expect.
more: 世界杯比赛名单 | 13 reasons to merge up | merger? the 100 data points you need first | one times fees isn’t the only way | thinking merger? first ask why.
the items in this article are very common examples of what sellers should expect from buyers. sellers are obviously free to try to negotiate any and all aspects of the deal that they want. but most buyers will not relent very much, if at all, on the items listed here.
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plus how sellers should assess them.
by marc rosenberg
cpa firm mergers: your complete guide
[now updated and expanded]
once sellers have created a list of firms they will consider as a merger partner, the first step is often to talk by phone or video call with the buyer and ask basic questions to determine if a get-to-know-you meeting makes sense.
more: 13 reasons to merge up | merger? the 100 data points you need first | one times fees isn’t the only way | thinking merger? first ask why. | why do you want to merge? be honest. | four reasons to fear a merger
the forms below are good cheat sheets.
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and sellers’ 13 top worries.
by marc rosenberg
cpa firm mergers: your complete guide
merging up or selling a firm is one of the biggest life milestones that a cpa firm goes through.
more: merger? the 100 data points you need first | one times fees isn’t the only way | thinking merger? first ask why. | why do you want to merge? be honest. | four reasons to fear a merger
you’ve toiled long and hard to build your firm. it’s your life’s work. adding to the anxiety is the element of facing your own mortality. when people contemplate big personal or business decisions, it’s common to need to move through several stages mentally. merging your firm is no exception.
the finer points of getting to know one another.
by marc rosenberg
cpa firm mergers: new and updated
before negotiations begin, it is very helpful for merger partners to prepare a one-page, written description of their firms. this advice is for both the buyer and the seller.
more: one times fees isn’t the only way | thinking merger? first ask why. | why do you want to merge? be honest. | four reasons to fear a merger
at the risk of offending some of you, we have found that when firms initially describe themselves, the person doing the listening does a terrible job taking notes. none of our memories are as good as we think they are. because in almost all cases, each firm will soon be describing the other to their partners, it’s always best to follow up the oral description of your firm with something in writing.
what follows is:
check the math.
by marc rosenberg
cpa firm mergers: your complete guide
partners in accounting firms are familiar with the rule of thumb that a cpa firm’s goodwill (excluding capital) is worth one times fees. however, like many rules of thumb, this notion is often incorrect.
more: thinking merger? first ask why. | why do you want to merge? be honest. | four reasons to fear a merger
when buyers begin to think about how much they will pay for a smaller firm, they often have this one-times-fees notion in the back of their minds. then, when sellers are bold enough to ask for a price in excess of one times fees, buyers often balk.
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keep your deal-breakers and must-haves to a minimum.
by marc rosenberg
cpa firm mergers: your complete guide
it’s important to understand the flow of the entire merger process. always start with the big picture before getting into the details.
more: why do you want to merge? be honest. | four reasons to fear a merger
every merger has its unique aspects. it’s impossible to choreograph from a to z exactly how the process for each merger will work.
the steps in the process listed below appear in the order of how they commonly occur.
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what it takes to get promoted.
by marc rosenberg
the rosenberg practice management library
cpa firms have many different titles or positions.
more: making partner: the essential metrics | what makes a partner | want to be a partner? meet these 17 expectations | five reasons not to make someone a partner | yes, you need another partner | six big mistakes in succession planning | what a firm needs from its leaders
today, we’ll address the most common:
i often use the term “staff” to refer to anyone who is not at the partner level. this is different from a “staff-level” associate, who typically has only a few years or less of experience in public accounting. but exactly what does it take to advance from staff to senior and from senior to manager?
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