Introduction

Two Accounting practices can look remarkably similar on paper. They might have similar turnover, similar profits and even a similar number of clients. Yet one may be considerably easier to sell than the other.

Why?

Because Buyers aren’t simply looking at the numbers. They are looking at the business behind those numbers and asking an important question: “If I bought this practice, how easily could I step into it and continue running it?”

Owner Dependency

One of the first things a Buyer may consider is how dependent the business is on the owner.

If the owner is responsible for most client relationships, reviews the majority of work, manages the staff, handles new business, a Buyer may see a business that is difficult to step into without the owner.

That doesn’t mean owner involvement makes a practice unsaleable. Most Accounting and bookkeeping businesses have an owner who plays an important role. But there can be a significant difference between being an important part of the business and being the business.

The Team

A capable team can make a significant difference to how a Buyer views an Accounting or bookkeeping practice.

If experienced staff already understand the clients, systems and day-to-day operation of the business, a Buyer may have greater confidence that the practice can continue operating after the owner steps away.

The opposite can also be true. A business that relies heavily on one or two key people may present additional considerations for a Buyer. Staff are not simply an expense on the profit and loss statement — they can be an important part of what makes the business transferable.

As highlighted in a recent blog about our experience earlier this year, staff are very important. https://abacusba.com.au/what-weve-learned-from-practice-sales/

Client Relationships

The quality of a practice’s client relationships can also influence how attractive it is to a Buyer.

A practice with long-standing clients and strong relationships may provide a Buyer with confidence that they are acquiring more than a list of fees. They are acquiring relationships that have been developed over many years.

But how those relationships are managed today is also changing. Some clients may have always dealt with the owner face-to-face, while others may now communicate almost entirely by phone, email or video. A Buyer may consider how the client base interacts with the business and whether those relationships can be transferred effectively, regardless of whether they are managed face-to-face or digitally.

Systems

Good systems can make a business easier to understand, operate and transition.

Most modern Accounting and bookkeeping firms already use cloud software and technology extensively. But when a practice is acquired, the question isn’t simply whether the Vendor has good systems — it is also whether those systems can integrate with the Buyer’s existing systems without causing unnecessary disruption.

A Buyer may already have preferred software, workflows and processes across their own practice. If the transition can be managed with minimal disruption to staff and clients, that can make the acquisition considerably easier. The systems themselves therefore become part of the practical consideration of how smoothly the business can be integrated.

Recurring Revenue

Recurring revenue is an important feature of many Accounting and bookkeeping businesses, but not all recurring revenue is necessarily viewed in the same way.

A Buyer may look beyond the headline revenue figure and consider the underlying client base, the nature of the services provided and how stable those relationships appear to be. Two firms with identical annual revenue can therefore present very different opportunities. We highlighted the importance of non-financial factors in the decision making of Vendors. Have a look at the blog we put together a year ago: https://abacusba.com.au/buying-an-accounting-practice-empathy/

This is another reason why simply looking at turnover doesn’t tell the full story. The composition of that revenue can be just as important as the number itself.

Transferability

Ultimately, many of these factors come back to one question: Can someone else take over the business?

An Accounting or bookkeeping practice may have excellent clients, good staff, strong revenue and healthy profits. Transferring that business to someone else is a key component as to the success of the acquisition and as such having the owner(s) involved is important.

A practice that can continue operating successfully while the owner gradually steps away may be easier for a Buyer to understand and transition. And importantly, that doesn’t mean the owner needs to disappear from the business overnight. What matters is whether the business can ultimately operate successfully without them.

Final Thoughts

“Price is what you pay. Value is what you get.”

Warren Buffett

When you’ve spent years building an Accounting or bookkeeping business, it’s easy to focus on what the business is worth to you.

But a Buyer is looking at something slightly different.

They’re asking themselves whether they can step into the business, take over the relationships, work with the team and continue what you’ve built.

That is why some practices can be easier to sell than others — and why the difference isn’t always found in the profit and loss statement.

If you’re considering selling your Accounting or bookkeeping business, or simply wondering how a potential Buyer might view it, contact Abacus Business Advisors for a confidential discussion.