How Much Client Attrition Should be Expected When Buying or Selling an Accounting Firm?

We get questions all the time about how much attrition should be expected when buying or selling an accounting firm. This can vary, of course, but generally we tell folks if buyer and seller do what they’re supposed to do from a transition plan standpoint, we see 90% plus client retention.

That can certainly be affected by a large client in the practice that makes up 15 or 20% of the revenue?
And if that client were to leave, certainly that, is going to blow that normal attrition right out of the water.

Same with the office location. If the buyer’s moving the office a half mile down the road to an existing office, maybe that’s different than if it’s an existing office 50 miles away. And as you can imagine, the attrition rates are going to be higher the further you get away.

The same goes with key staff. If key staff are not part of a transition, that can cause attrition rates to go higher. The other thing that we see in firms the size that we work with is the golden referral.

So anytime a practice is sold, if there’s a transition, the referrals tend to continue. So you may have some attrition and it could even be normal stuff that would have occurred without the sale of the business, clients passing away or retiring, selling their business, etc. But the referrals continue.

And so generally we’ll see certainly some client loss. But then that gets partially offset, typically by new clients that may be referred into the business that first year.