5 reasons to move into sell mode at your firm amid coronavirus

June 19, 2020 5:11 PM

It’s a frequent scenario. Your accounting firm’s partners are all baby boomers, either planning or dreaming about retirement. Every year you ask yourselves: Is this the year to look at selling or merging?

For some, the COVID-19 environment has intensified that questioning. For others, it may be too soon — or they just can’t think past the current operating challenges.

I often get asked whether this is the right time to be a buyer or a seller. I think it’s a good time to be opportunistic about your firm’s future — and to poke these embers in a meaningful way. Apart from health reasons and lease renewal, I think there are five main reasons to be a seller right now.

The buyer landscape

The buyer community now includes new or less active buyers. Prompted by the need to decrease client losses and staff worries, new and interesting faces are presenting themselves in the marketplace. Geographic boundaries are coming down as remote work has become more and more effective. Firms from outside your area feel they don’t need to be as close to take on a practice successfully. The regular faces whom you may have met and dismissed — or may have dismissed you — are no longer the only show in town.

The appeal of old-fashioned compliance

Annuitized and ongoing work is less of a risk and requires little investment to transition. Client service efficiencies based on the technology of the successor can create profit quickly. Where in recent years there was an apprehension to add 1040s and basic compliance, now basic work is in demand, albeit based on some minimums.

The client base worry

When worry hits the economy, clients wonder about the longevity and strength of their advisors. The stronger the perception about the talent and continuity of the adviser, the better. COVID has tested many CPA firms, and some have handled the tension better than others. Clients are looking at options and are now worried about another COVID wave. Joining forces with a deeper firm — or actually becoming a deeper firm — is exactly what will result from completing the right transaction.

The staff challenges

Keeping good staff is a problem borne of many issues, not the least of which are professional challenge, compensation, stability, training and work-life balance. Retaining strong people and grooming additional ones is a shared priority for buyers and sellers. Making firms stronger during this time of a pandemic will make staff more comfortable.

The runway flexibility

New acquirers are less fixated on very short exits for the sellers. Well-defined leadership roles are on the table now — which could allow for a longer working timeline if the seller is interested. Common ground is more of a priority now than ever before. If the buyouts are going to be extended — which they are — then playing a role for a longer time is going to be mutually beneficial.

Ira S. Rosenbloom is CEO of Optimum Strategies, a company that improves the performance, profitability and succession options of small- to mid-sized accounting practices across the Mid-Atlantic region.