Buying an existing accounting practice can be an excellent way to fast-track your career growth or expand your current operations. However, navigating the acquisition process requires careful planning and thorough due diligence.
Whether you’re a sole practitioner looking to grow or an established firm seeking expansion, understanding the purchase process is crucial for making sound investment decisions.
Why Buy Rather Than Build?
Growing an accounting practice organically takes years of consistent effort and significant investment in marketing and business development. Buying an established practice gives you immediate access to a client base, proven systems, and cash flow.
The current market dynamics also favour buyers willing to pay fair prices for quality practices. With many baby boomer accountants approaching retirement, there are opportunities to acquire well-established practices with loyal client bases.
Types of Practices Available
The Australian market offers diverse opportunities, from small suburban practices focused on individual tax returns to large metropolitan firms offering comprehensive business advisory services.
Regional practices often provide excellent lifestyle opportunities with loyal local client bases, whilst metropolitan practices may offer higher fees and more sophisticated service offerings.
Specialised practices focusing on specific industries or services (like SMSF administration or medical practices) can command premium prices but offer strong competitive advantages.
The Due Diligence Process
Thorough due diligence is essential before committing to any purchase. This goes far beyond reviewing financial statements to include analysing client retention rates, fee structures, and operational efficiency.
Pay particular attention to client concentration risk. A practice heavily dependent on a few large clients carries more risk than one with a diverse client base.
Review the practice’s systems and technology. Outdated software or manual processes may require significant additional investment after purchase.
Financing Your Purchase
Most accounting practice purchases involve a combination of upfront payments and deferred consideration based on client retention. Typical structures might include 70% at settlement with the balance paid over 12-24 months.
Banks generally view accounting practices favourably for lending purposes, given their stable cash flows and low asset requirements. However, you’ll need to demonstrate your ability to maintain the practice’s performance post-purchase.
Integration and Growth Strategies
Successful integration requires maintaining client relationships whilst implementing your own systems and processes. Plan for a handover period where the seller introduces you to key clients and explains operational procedures.
Consider opportunities to add value through expanded services, improved efficiency, or better client service. Many acquired practices have untapped potential that the right buyer can unlock.
How SMF Can Help
At Sell My Firm, we maintain an extensive database of quality accounting practices available for purchase across Australia. Our detailed practice profiles give you comprehensive information about each opportunity, including financial performance, client demographics, and growth potential.
We handle all aspects of the transaction process, from initial matching through to settlement. Our experience in structuring deals ensures both parties achieve their objectives whilst minimising risk.
Our post-sale support doesn’t end at settlement. We provide ongoing guidance to help ensure successful integration and maximise the value of your investment.
Looking for the right practice to buy? Contact SMF to discuss your requirements and explore current opportunities that match your criteria.