Mergers & acquisitions.

• Author: R. Ezell, John
• Position: Interview

Heard horror stories about a merger or acquisition that went wrong? Maybe spending a little extra and hiring some help with the process is a good idea. Here are some questions a CPA could ask a potential representative or broker:

Should I consider giving a retention guarantee when selling my practice?

While there might be good reasons for selling for a fixed price, a seasoned broker will know that a fixed price is only possible in highly competitive circumstances. In my opinion, if you're set on selling for a fixed price, you're significantly limiting your buyer pool. Most buyers, including some that may be the best buyer for your practice, will not consider purchasing a practice without some type of revenue guarantee.

What is your closings to listings ratio?

Not even the best broker will have more than an 80 percent success in selling all of their listings, but it should be greater than 50 percent. Some brokers will list 50 or more practices for sale in a given year, but sell fewer than 25. Another broker may take 40, but sell 30. Remember: it's not the number of listings that's important, but the number of sales.

Are CPA firms the only or primary type of business you sell?

Some brokers sell many types of business, including dental, chiropractic or other professional services.

Accounting firms are unique enough to require a specialist to offer the necessary services.

How do you educate the buyers and sellers in the process of selling a practice?

Most qualified brokers...