Buying someone else’s CPA practice could be a great way to rapidly expand yours or make it easier for you to get up and running with your own business. Buying an existing practice does have some drawbacks, however, and you have to be careful as many things can go wrong during the process. You also have to understand what makes a practice valuable and whether it would be a right fit for you. Let’s take a look at some of the things you should consider before buying a CPA practice.
Everything is in the Purchasing Agreement
One of the first things you should start studying is purchasing agreements. This will tell you what you’re getting and will include terms that could be favorable or unfavorable for you. You could include a clause that would allow you to return the business if too many clients or employees end up leaving after you acquire the practice, for instance. You may also want to include a clause that would prevent the seller from coming after their old clients after the purchase, which is extremely important. If you want to learn more about what should be included in a CPA purchase agreement, POE Group Advisors is a great place to start. They offer tons of information on some of the things you should be watching for.
Another thing you have to pay special attention to when buying a CPA practice is the type of clients you will be serving. Some firms may deal principally with businesses, for instance, while others might deal with seniors or young professionals. This is very important as you may prefer working with regular people over businesses for some reason, or you may have expertise working with businesses and feel more comfortable working with them.
The location of the firm is very important as well. You may prefer to buy a firm close to where you are, but you should also consider looking outside of your direct vicinity as it will broaden your options. You can’t pass up on a golden opportunity because of travel. As long as it’s a reasonable distance, you should consider all options.
The type of area where the practice is located will also influence the type of people you’ll be serving. If it’s in an urban area, then you can expect to see more foot traffic and mixed bags of clients. However, you can also expect to work longer hours.
If you have a practice in the suburbs, you might get slightly older clients and an easier workload, but you might have to work harder to find clients. If the practice is in a rural area, then you can expect to get farmers and small business owners. So, be prepared for those things and look at the bigger picture whenever you are looking at where a practice is located.
Buying a CPA practice may be a great decision if you’re trying to transition from employee to business owner or boost your current practice’s growth. The most important part here is to do your due diligence and know exactly what you’re getting before you sign anything.