Buying, selling a practice? two members sare their experiences from both sides of the equation.

• Author: Calkins, Brenda

At some point in their careers--if not at many points--a CPA's thoughts turn to the future as they attempt to answer questions about their practice. An aging firm without a successor might look to be acquired. A small-or mid-sized firm, with focused specializations and limited recruiting capabilities, looking to grow may want to buy. These, and other, personal-and business-related factors all play a part in the decision to either take the firm to another level--or walk away from the game.

The following are some pointers from CalCPA members with experience from both sides of the equation.

Shopping Around:

Finding the Right Match

By Joseph C. Kovar, CPA/PFS

There are many reasons you might decide to buy a practice: to expand services, establish a succession plan or simply because it makes economic sense, are just a few. Sweeney Kovar Investment Advisers has acquired and merged four CPA firms into our practice over the past 15 years. Whatever your reason may be to buy a practice, one thing to keep in mind is patience. Each deal our firm has been involved in has taken anywhere from one to three months, depending on the seller's motivation.

While each deal is different, the following factors are critical to a successful merger:

1. To determine whether there's a match, review the seller's tax and accounting files for quality control, and review the billing files to determine if the firm bills similar amounts for similar services. Historically, our firm has looked for CPA firms that are smaller than we are and offer similar services.

2. Look for a CPA firm that is located in the same geographic area as your firm. This will allow moving the practice into your office without causing a major disruption to the new clients. There's also an economic benefit in an acquisition when you can avoid adding overhead costs for a new location.

3. Look for a seller that is willing to spend the time to ensure the hand-off goes smoothly. Sellers must understand it's in their financial interest to spend enough time, be it days or weeks, to provide proper introductions between staffs and clients, and to ensure that the former clients are comfortable with the new CPA. This helps the seller because the final purchase price is dependent on the billings that can be transferred to the acquiring company.

4. If possible, structure the timing of the purchase for the fall to allow enough time to prepare the office and tax software for new clients. This also provides sufficient...