plus 16 reasons it causes anxiety.
by marc rosenberg
cpa firm mergers: your complete guide
while selling to a larger firm may ultimately be the most viable succession plan available to a small firm, the prospect of the merger creates a great deal of anxiety among small firms nonetheless. the larger firm’s sensitivity to these concerns is critical for a successful meeting of the minds during the negotiation phase.
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why small firms are so anxious about merging up
- loss of control, loss of control and loss of control
- loss of their job or a substantial reduction in their role. it’s possible that some of the smaller firm’s partners may not be invited to be partners in the new firm.
- being forced to market when you have not done so in the past
- being forced to work more billable or total hours; higher performance expectations
- loss of clients
- bureaucracy
- bad experiences with larger firms when the partners were younger
- more advanced planning will be required because the small firm will lose much of its ability to “push” through last-minute jobs; it may take longer to get some things out the door.
- you’ve always been a doer (some like to call it being “hands-on”) and they’ll make you be a delegator.
- can your ego handle not being the undisputed king (tyrant?)? can you handle not having a say in the management of the new firm? when a smaller firm merges into a larger firm, the smaller firm’s owners need to go through a hazardous operation called an “ego-ectomy.”
- you like being “loosey-goosey.” you fear, quite rightly, that the new firm won’t permit you to “opt out” of policies, procedures and systems on a whim. a higher level of partner accountability will be required.
- now, you come and go as you please. the new firm will make you “clock in.”
- they have a mandatory retirement policy. you aren’t sure when you want to retire, but you don’t want to retire when they say you must.
- new, larger firm will lose the “small firm feel.” relationships could be less personal, resulting in possible exodus of staff who prefer a smaller firm culture.
- higher performance expectations
- you’ve been a generalist all your life. you fear that at the larger firm, you may have to choose between a&a and tax.
the benefits of merging up
while the foregoing list of concerns are common and certainly valid from the seller’s perspective, there are a number of compelling reasons in favor of acquisition by a larger firm.
following are some of the key advantages to be realized by merging with a larger firm.
- better ability to attract staff
- more proficient management and leadership
- make more money
- secure an exit strategy
- larger firm better positioned to attract larger clients
- more diversity of services
- larger firm size makes it easier to afford high-level support professionals such as a firm administrator, marketing director, hr director, it director, etc.
- better staff training
- more advancement opportunities for your staff
- more technical backup
- lower overhead, possibly
- a better age spread among the partners