The Surprising X Factor When Selling Your Firm

Article by: Ange Macdonald , Monique Parker from AccountanXy

With a significant number of accounting firm owners looking towards a well-deserved retirement over the next decade, the industry will see an increasing number of mid-tier practices in the mergers & acquisition market.

Unlike smaller parcels of fees, there are more considerations when selling firms with more than one partner, entrenched team members, and legacy client bases. While it may be tempting for firm owners put the foot on the brakes and coast along in the final five years prior to selling, this approach could severely limit their prospects.

Ensuring that your firm remains relevant in today’s market is the key to maximising your saleability and fulfilling your long-held ambitions for a successful exit.

Here are some lesser-known factors to consider that may impact the sale value of your firm…

Brand Equity: have you built a stand-alone brand is an asset that is attractive to future clients and potential new team members? Does your branding, reputation and goodwill hold any value in the market beyond just your fee base?

MarTech: have you invested in establishing marketing & technology systems that enhance your internal client communications and outbound market communications? Is your website and social media presence reflective of a modern accounting approach?

Client Attraction: do you have a significant portion of your client base that are legacy clients that are ‘ageing out’ of the business over the next 5 years? If so, do you have consistent marketing systems & activity in place to generate new client enquiries every month to maintain (and grow) your fees?

Differentiation: does your firm have areas of specialised expertise or niched services that would make your firm a great candidate for an acquisition within a group umbrella or merger with a complementary firm? Firms without a point of difference are often in a pricing race to the bottom, whereas firms with a clear point of difference can pick and choose their clients & strategic partners.

Advisory Work: what percentage of fees in your firm come from advisory services or other higher-margin work beyond compliance? A good ratio of A-class clients on the books not only generates more profit but helps to retain top talent in meaningful roles. This aspect is highly attractive to similarly minded buyers who understand the market.

Succession: if you are looking for the “right” buyer to take over the clients & team members that you have spent decades cultivating, it’s important to present the right image in market. People do judge a book by its cover, and the same goes for your firm.

There’s a lot of considerations at play here, but there is one common X factor behind them all when it comes to standing out in a sea of traditional firms.

You might be surprised to learn that it’s not better workflow management or updating your software technology stack (although these are both important)…

…rather, it’s about positioning your firm as a highly valuable business (vs compliance fees as a commodity) and that comes down to your marketing.

Many traditional firms may have grown organically but are now finding themselves competing in a rapidly evolving online landscape amongst newer, disruptive firms.

Over the coming years, those partners that view marketing as a strategic investment will be at a clear advantage when it comes to future-proofing their firm. Effective branding, marketing, and communication pay dividends both in the short term (better clients, team acquisition) and as a saleable proposition when the time is right to retire.


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