Managing Director Transition Advisors
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The 7 M&A Steps Your Firm Needs to Know

Aug 1st 2018
Managing Director Transition Advisors
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people around a table holding puzzle pieces

In a merger decision, whether the choice to affiliate with another practice was for succession, growth or new market penetration, inarguably one of the most critical aspects to closing on a merger is to ensure the process does not get bogged down and keeps moving forward.

The time-proven axiom of “time kills all deals” is particularly true when it comes to mergers between CPA firms. Nothing positive ever comes as a result of a stalled merger process.

A protracted timeline fuels doubts in the minds of both the seller and buyer with regards to whether each has selected the right partner, while dragging out the process often opens an opportunity for your competition to enter the negotiations. And there is often the risk of staff finding out that something is amiss which can frequently ignite a panic.

A Case Study

Last year, I was called in to help facilitate a merger between two firms. The buyer firm, a $5 million, four-partner practice was set to absorb a $1 million, two-owner firm seeking a succession plan. However, after an aggressive start to the merger process, the buyer firm inexplicably stopped regular communications and caused the seller firm to contact us and ask several uncomfortable, but legitimate questions:

1. We don’t seem to be a priority to them – have we made a mistake in agreeing to merge?

2. Are they so busy that they don’t have the internal capacity to take us on?

We immediately sat down with the buyer firm and explained the negative perception of their inertia. They understood and quickly picked up the pace. Several months later, they culminated what has been a beneficial union for both.

As such, we recommend seven steps to manage a deal and keep the process moving. These steps will heighten the probability of closing a deal and avoid wasted time and resources pursuing a union that wasn’t meant to be.

Step One

The firm seeking to merge up or sell should prepare a generic practice information sheet that outlines their financial schematics (i.e., volume, billing rates, profit margins, headcount etc.) but not disclose confidential information such as client names.  The sheet should also include strategic goals for the affiliation.

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