buying a solo

two people sitting across from each other at a deskwhat 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 | 世界杯2022夺冠热门 | thirteen ways to woo potential firm buyers | one times fees isn’t the only way | four reasons to fear a merger
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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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23 questions for mergers of equals

five businesspeople shaking hands under office skylightwhat 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: 世界杯2022夺冠热门 | why merging in smaller firms is fabulous | 13 reasons to merge up | thinking merger? first ask why.
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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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世界杯2022夺冠热门

businesswoman in a meeting with a male colleague smiling at him as they sit at a table discussing paperwork over coffeeeverything 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.
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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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why merging in smaller firms is fabulous

businesspeople having a meeting over coffee sitting together at a table discussing a document, young man and two middle-aged women presenteleven 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 | thirteen ways to woo potential firm buyers | 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
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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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selling your firm? what to expect

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: thirteen ways to woo potential firm buyers | 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.
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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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thirteen ways to woo potential firm buyers

man writing in notebookplus 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
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the forms below are good cheat sheets.
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13 reasons to merge up

woman ladder binoculars city view outlook vision success climb adobestock_57204649.jpegand 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
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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.

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merger? the 100 data points you need first

meeting of six peoplethe 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
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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:

  1. what the written firm description should include (12 items)
  2. get-to-know-you meeting between buyer and seller (the agenda)
  3. sample firm description
  4. the get-to-know-you meeting cheat sheet
  5. key questions for the first meeting (43 items)
  6. 20 questions to ask right away
  7. the data needed to evaluate a merger
  8. financial and operating data to exchange (58 items)
  9. client list (with 9 items for each)

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one times fees isn’t the only way

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
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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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thinking merger? first ask why.

businesswoman walking up stairskeep 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
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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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from senior to manager in 12 quick questions

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
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today, we’ll address the most common:

  • staff
  • senior
  • manager

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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what cpa firm buyers want … and don’t

woman with disapproval face.sellers, how do you compare?

by marc rosenberg
the rosenberg practice management library

many years ago, i was overjoyed that the managing partner of one of chicago’s largest local firms (long since merged out of existence) called me in for a meeting. today, i would have asked what the guy wanted to discuss before shlepping to his office. but 20 years ago, i was just happy he called me.

more: inside a partner comp committee | rewarding partners for seniority: pros and cons | what if founders don’t want to buy each other out? | when cpa partner votes go wrong | why billing less may mean earning more | what smaller firms must do to become firms of the future | when managing partners can’t | don’t let exiting partners double dip | the 13 signs you have a partner problem | covid-19, adversity and innovation
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the managing partner proceeded to tell me that his firm was looking for smaller firms to merge in. i asked him what the parameters were for his search.
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why do you want to merge? be honest.

then we can talk about how.

by marc rosenberg
cpa firm mergers: your complete guide

whether you’re looking to acquire a smaller firm, merge upward into a larger one or join forces with an equal, answering this basic question honestly and objectively is key to laying the groundwork for a successful merger.

more: four reasons to fear a merger
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the table below lists the main reasons that firms seek mergers. some of them benefit both buyer and seller. others provide the greatest advantage to one firm or the other, depending on the unique situation.
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four reasons to fear a merger

purple no. 4 billiard balland eight ways to tell that one was successful.

by marc rosenberg
cpa firm mergers: your complete guide

as a generation of aging baby boomer partners continues its relentless march toward retirement, thousands of firms are seeking the only exit strategy available to them: merge into another firm.

more:  12 shifts to ensure firm success |  eisneramper ceo explains the firm’s private equity deal  |  why it’s time for an acquisition  |  are you overthinking an m&a deal?  |  the 9 biggest merger pitfalls  |  will new taxes push you to cash out?  |  the managing partner’s role in mergers  |  inside a partner comp committee  |  making partner: the essential metrics  |  want to be a partner? meet these 17 expectations  |  five reasons not to make someone a partner  |  do you really need another partner?  |  six big mistakes in succession planning  |  new non-compete laws don’t affect cpa firms  |  evaluating the managing partner  |  what a firm needs from its leaders  |

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thus has a voracious appetite for mergers been created at all size levels, particularly:

  • sellers who are very small firms – sole practitioners (remember, 30,000 of the u.s.’s 44,000 cpa firms are solos, and a huge percentage of those are at an advanced age) and multipartner firms under $3 million
  • buyers with annual revenues of $3 million and larger

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inside a partner comp committee

how buyout was affected.

by marc rosenberg
the rosenberg practice management library

we worked with a 10-partner cpa firm a few years ago to change their income allocation method from an incredibly complicated formula that was deeply flawed to a compensation committee (cc). we talked to the partner group recently to get their feedback on how things worked out.

more: rewarding partners for seniority: pros and cons | what if founders don’t want to buy each other out? | when cpa partner votes go wrong | why billing less may mean earning more
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why did you adopt the cc? it embraces the fundamental concept that an accounting firm’s success depends on its partners’ production and intangible attributes such as management, leadership, mentoring staff, and teamwork, among others.
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