What Questions Will You Be Asked When Selling a CPA Firm?

Sellers will be asked different questions at different points in the process of selling a CPA firm. Brokers have questions, banks have questions, landlords have questions, and of course, buyers have question. Buyer’s questions are more general at the beginning of the process and get more specific as they start due diligence. Most questions are not difficult to answer. For starters, sellers should be able to answer the following questions for anyone that might ask:

Please tell me a little about your CPA firm. This means what type of services you provide, how many clients you serve, what are your billing rates, the history of your clientele, etc.?

Why do you want to sell your CPA firm? The answer may be simple or complex. If the seller is 65 years old, qualifies for Medicare, and has been in public accounting for 40 years, retirement is an easy answer. But if the seller is in their forties and doesn’t have a concrete reason for selling other than burn out, this may raise concern for buyers. Buyers will wonder why someone would sell such a wonderful practice! Selling the practice to take advantage of a job opportunity or because of health problems may be a good reason to sell but selling without any logical explanation may create suspicion. What are your plans after you sell your firm? If retirement, will the seller be staying in the area? If a job opportunity, where and when will this take place? Often times, this question gets asked to confirm a seller’s reason for selling and put this subject to rest.

Tell me about your employees. The seller should be familiar with the amount of time each employee has worked there, their approximate ages, and educational levels. Does any staff represent a competition risk to the buyer? Are long term employees nearing retirement themselves? Do any aspire to be the buyer?

What kind of clients do you have? Some practices are easier than others to describe. Try to keep it short without leaving out important items. Is there any concentration risk in the client base, i.e. 70% are in construction, 40% only speak Korean, the top two clients represent 20% of gross revenue? Consider what would be important if you were asking this question.

What is your description of the perfect buyer for your CPA firm? The answer should come quickly and include more than “a buyer with cash”. What kind of personality, experience and age range would appeal best to your clients?

What are your expectations of a broker? Is it simply to bring a buyer to the table? Is it to negotiate the best price? To make sure things are done in an orderly fashion? The answers will determine how you proceed with a broker and what follow-up questions to ask. If a seller is serious about selling their practice and doing it right, they should be prepared to answer these basic questions and others that will come along. None of them are particularly difficult, but it’s best to be prepared and orderly rather than hesitant and unsure.