Owners of small to mid-sized CPA practices often like to “keep things in the family”, so to speak, by selling their CPA practice to an employee. But while some employees can be very good purchasers, this plan often fails.
Why don’t many employees make good owners? It comes down to skills and pay.
These days, trying to use the old model of grooming somebody from within to take over your CPA practice is almost an impossibility. Competition for the best “up and coming” CPAs is intense. The most skilled professionals are often lured away by larger CPA firms and other companies.
A small CPA practice is like a hive, filled with worker bees but only one queen. Many CPA firm employees are like these worker bees – solid, reliable, good quality people who consistently do their job well. However, they often lack the charisma and skill set to become high-level leaders or CPA practice owners. They are unlikely to have sufficient people skills and high-level expertise to run the business and attract new clients.
Despite the fact that single owner CPA practices would like to pay their employees more, everybody knows the truth: Large, top-tier firms pay higher salaries. So, unfortunately, your ability to retain a successor as an employee is detrimentally affected by this fact. People with top-notch skills can usually find better jobs with higher salaries than small to mid-sized CPA firms offer. So it’s very unlikely that a strong candidate to be your successor is waiting in your ranks for his chance to lead. Any such candidate probably left for more lucrative pastures years ago or was never hired in the first place.
Why is competition for these strong leaders in the accounting profession so intense? Several business, educational and societal factors come into play.
In the 1990s, most of the state boards increased the number of college hours students had to put in before sitting for the CPA exam. Most states started requiring 150 hours, which is a master’s level education, rather than merely an undergraduate degree in accounting. This increased educational requirement coincided with the “dot com” boom. Suddenly many young people were hoping to strike it rich with only a high school diploma or a couple of years of college. Grinding through 150 college hours to sit for a CPA exam was much harder and less glamorous than going for broke in Silicon Valley.
Governmental policies also played a part. The Sarbanes-Oxley Act of 2002 – which passed into law after scandals involving public companies – added a massive administrative burden to many companies, and siphoned off available professional labor of qualified CPAs. Suddenly many promising young CPAs weren’t looking to be hired by the small to mid-sized firms. Instead, they could be paid handsomely by accepting jobs at the top-tier accounting firms and public companies.
How We Can Help
Accounting Broker Acquisition Group can help you find the buyer with the right skill set and adequate funds to give you top dollar for your CPA firm. Our database of tens of thousands of active prospective buyers is overflowing with good candidates. And our accounting practice brokers narrow these down to the perfect match. How do we manage to maximize the selling price and cash at closing for our sellers, again and again? Experience and top-level employees. Accounting Broker Acquisition Group is the only national business brokerage of its type comprised 100-percent of brokers who are CPAs with significant “Big Four” merger and acquisition experience. Contact us today to find the perfect buyer and maximize profits when you sell your CPA practice.