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What to Expect When Selling Your Tax Practice Or CPA Firm

The more prepared you are the better the  transaction will go, so here are a few tips and guidelines that should better prepare you for selling.



Before you even list the business with a broker there are a few things you can do to make the business look more attractive. Often business owners are so busy treading water every day, they fail to take a step back and look at their business from the perspective of the buyer. Try to put yourself in a buyer’s position and ask yourself what would be attractive and what wouldn’t be about your business. Also, it’s important to take this time to analyze where the business is coming from. You need to look within the revenue. Get familiar with some basic questions any buyer might ask, how many clients do you have? Demographically where are they located?  How much revenue is tax service, bookkeeping, tax resolution, consulting etc.. How much is the average return? What age group are the majority of your clients in? How many returns are personal verses businesses? It’s import to get to know your business through different eyes because this might show you where you need to focus to build the business into something stronger and more attractive to a buyer.



When you list your business with a broker, be prepared to get organized. Get your tax returns ready, bank statements and generate P&L's for the last 3 years. If you have a leased spaced prepare a copy for the broker and any other leased item that will be assumed by the buyer. The faster a broker receives what they've asked for the faster the business will sell. I personally, don’t begin advertising until I get most of the documents I've asked for. In addition, I lose interest in listings that require me to call the seller repeatedly for documents. You only get one chance to make a good impression so I work closely with my sellers to make sure the financial documentation is right the first time.



Selling a Tax Practice or CPA Firm is the type of business that demands a good exit strategy. The biggest fear the buyer has is attrition. There will be attrition that is inevitable. The norm is approximately 15%, of course that can go up or down depending on how hard you work at transitioning those stubborn clients who resist change. It will be in your best interest to be convincing, as you will have to give the buyer a guarantee and a note. This means that you will receive a significant portion of the money at the close but the balance will be given to you usually after May 1st the next year and November 1st, for the second installment. Typically these transitions happen after tax season so there’s plenty of time to send out letters and place phone calls if necessary. You will also need to get permission from each client to give historical information to the buyer. 



These are just some of necessary steps to follow to successfully sell your Tax Practice/ CPA Firm.



About The Author: For more in depth communication please call Christina Lazuric, your Tax Practice / CPA specialist at 949-257-7823.


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