Q&A: Why this CPA sold her firm in separate transactions

Instead of selling your entire firm to one buyer, you ultimately sold it in three parts to three different buyers. How did that happen, and why did that structure make more sense than a traditional sale?

We had a succession plan going for my clients, and my husband/business partner, Randy Cannon, had planned to keep some clients and semi-retire. But that didn't go as planned. Randy had a stroke this spring and immediately retired. Thank goodness we scheduled tax prep and didn't have a business crisis at the same time. We sped up the succession plan for my clients and had another CPA show interest in Randy's clients. The third sale was for our largest clients, and I had a relationship with a CPA who was the perfect fit for them. Everything really fell into place, and I'm so thankful for that.

How did you approach transferring knowledge and relationships to the new owners?

I have made myself available for the buyers as needed and will continue to be for the next year. We've tried to do a good job of documenting account history and pricing information. I personally introduced our clients to their new accountants rather than just handing over a file. In our industry, clients place a lot of trust in us, so it was important the transition never felt abrupt. 

Are there certain types of clients, services or pricing arrangements that can actually make a firm harder to sell?

Definitely—clients who are underpriced, high-maintenance or don't fit where the firm is headed can really drag down marketability. Solid processes, market pricing and A+ clients are what fix that. 

It's good to clean up the client roster every year.  A couple of years ago, we ended up short two tax preparers, so we took that opportunity to clean up our client roster instead of hiring. We let go of 276 clients. That was one of the best things we've done for our firm.  When you start an accounting/tax firm, you take any client you can get, but those clients aren't always a fit as you grow. 

We also had a significant price increase that same year. 

And we've been scheduling tax prep for four years, so we had a controlled weekly workload. No more working weekends, unless you want to. Scheduling tax prep has not only helped us control our weekly workload, but it helps us to be more efficient—now the firm usually has all the tax docs when starting to prep the return, and the client status checks have almost completely gone away because the client has a specific tax return delivery date. 

I think all of those changes helped our firm to be more marketable.

After building a firm for 15 years and then seeing it through the eyes of three different buyers, what do you understand about running a successful CPA firm now that you didn’t understand while in the middle of building one?

When you own a firm, you get to know your clients so well, and that knowledge can stay in your head. If I were to do it again, I would have had a better process to keep notes about clients. I also should have set better boundaries from the beginning. It's hard to retrain existing clients, but much easier to tell new clients how you work. And I wish I'd understood my value sooner. Our industry really struggles with that. I would've started with more competitive pricing at the beginning and understood that some prospects will think I'm too expensive. That's how you know your pricing is where it should be.

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