Who Is Buying Accounting Practices?
There are currently three groups of people that I have come across who are buying Accounting Practices. These groups are:
This is a pretty obvious answer. Of late, the accountants that I have spoken to who are looking to purchase an accounting practice are those who would entertain purchasing a practice that is of similar size to themselves. Essentially, they want to double over night. If I am selling a $1M practice, the Buyers that I seem to be attracting are those who are turning over around the $1M range themselves.
I have found there is an even spread of Buyers who are opting to keep the acquired practice in its current location and those who want to move the acquired practice to their own premises. In Brisbane, some Buyers are looking to make an acquisition so they can fill vacant space in their office and maximise their efficiency’s through scale.
Accountants who have opted to swallow the acquired practice into their existing operation have done so with the original Principal moving with the practice. In these instances, the original Principal has been happy to move so that they could maximise their “Retention”.
Financial Planners –
Acquiring Accounting Practices is certainly growing in popularity in the world of Financial Planners. I recently ran an exercise in early July where I reached out to 20 Financial Planners to gauge their interest in purchasing additional Financial Planning practices. Surprisingly, 13 parties came back to me stating that they are on the hunt to acquire accounting practices.
Financial Planning principals have recognised that one of their primary referral sources are Accountants. By purchasing Accounting Practices, Financial Planners can control the flow of referrals and create a true sales program to “internal” clients.
More often than not, Financial Planners who acquire accounting practices ask the original owner to stay in the practice for a period of time.
Having spoken to a Financial Planner recently who is looking to purchase Accounting practices in Sydney, Melbourne and Brisbane, they advised they typically offer an upfront payment of 60 to 70%. The balance of the payout will be made monthly over 2 more years.
Investors are looking to purchase strong accounting operations. A number of investment groups have aggregated multiple Accounting Practices with the view to take the greater group public.