Key Considerations When Buying a Firm

By David Davis, CPA and Barbara Kong, CFP®, JY WealthCare, LLC

Thinking of buying a firm but not sure where to start? That question is being contemplated more and more every day with more mergers, acquisitions and consolidation taking place across the accounting and wealth management industry today.

There are some key things to consider and to look for when seeking a purchase of another firm or a merger of businesses.

JY WealthCare purchased the financial services business of a local CPA firm, a financial services and tax practice with a solid list of clients that complemented our services. The owner was also affiliated with 1st Global, the same broker-dealer as JY WealthCare. In 2010, the owner and sole practitioner of the other firm was considering a transition into retirement. He had had his own CPA business for 38 years and added financial services in 2000 and was ready to retire. JY WealthCare was looking to expand, so the opportunity to buy his business came at a great time.

There was a comfort level in moving forward with the buyout because his firm was very much like ours in philosophy, work ethic, services and clientele. We also relied on 1st Global’s services and expertise with succession planning to help both firms make the transition smooth. With a great attorney working on the merger, we took eight months to complete the process and make sure the numbers made sense; then we acquired the financial services practice. The overall process was very amicable for both parties.

Tips for Success

1st Global’s valuable tools and resources played a significant role in the success of our merger. 1st Global provided much needed back-end help and the Business Management Services (BMS) department worked tirelessly to transfer assets from his business to ours.

In addition, here are a few other tips we have learned from our experience that can make for a successful sale of a financial advisory practice.

1)     Find a Willing Seller – While it might seem an obvious statement, it’s important to find sellers who are willing to part ways with their business. They need to have the right motivation and objectives to sell, and a willingness to be open to the transition and exchange of their business. They need to identify the right objectives they’re trying to reach by selling their business, while you should be open and understanding as to why they are selling at the time.

2)     Seek Similar Philosophies – Having the same or similar business philosophies is important so your companies can speak the same language in negotiations. You also want to be sure the sellers' clients continue to work with your firm after the merger, and by agreeing with your value and business philosophy, those clients can be set for long-term success. In our situation, 1st Global had already provided both our companies with the same model and business philosophies in which to operate, so we already had similar philosophies.

3)     Look at Similar Philosophies and Similar Systems – If your firm and the one with which you are merging have similar views and are businesses of like minds, you can set realistic negotiations and terms. Suggested changes and terms can be agreed upon more easily with healthy balanced negotiations. Plus, if you have similar processes and systems in place, the transition of files and clients is much easier and will go more smoothly. Integration of clients and information will be faster so you can work with them early in the transition period. It’s a win/win situation.

4)     Weave in a Similar Business Culture – By having a similar philosophy, the work culture will most likely be the same and that spells success for your clients and your employees. Because the other CPA firm used the Method 10™ – a complete methodology for organizing and prioritizing our clients’ financial needs -- as we did with 1st Global, we knew we could integrate our practices seamlessly and show our firm’s commitment to our clients easily.

By knowing how the members of other firm think and work, and their true reasons for selling, your firm can get to know your incoming clients more intimately and quickly, so you can give them the quality service they seek, need and deserve.

Lesson Learned

From our experience, the overall merger and transition was very smooth and 1st Global played a key role in making it successful. If we had to do it all over again, the only thing we would do differently is enhance the integration process earlier. The transfer process of clients from the acquired firm to ours was a little challenging and time consuming, but with better, more consolidated systems in place to ensure client information is captured and transferred easily, you can accelerate the transfer seamlessly and reach out to clients more quickly following the buyout.

JY WealthCare is a stronger, more successful company today because of the purchase. It was an exciting challenge that we took on with passion.  We were fortunate enough to find a like-minded partner willing to sell to us.

Want to read more from 1st Global? Follow us on Twitter @1stGlobal or on LinkedIn. You can also watch videos on the company’s YouTube Channel.

David Davis, CPA is managing partner and Barbara Kong, CFP® is director of financial services for JY WealthCare, LLC. JY WealthCare helps clients design a comprehensive, personalized wealth care plan that sets them on the right track toward achieving their goals. Learn more about JY WealthCare at

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Securities offered through 1st Global Capital Corp., Member FINRA/SIPC

Investment advisory services offered through 1st Global Advisors, Inc.

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