Why You Should Not Prejudge a Practice Acquisition Target Before Talking With The Seller

This is Jeff Bell with ABA Advisors, your accounting firm business broker.

One of the situations we run into with Buyers looking to acquire a firm is they look at our listing description or sign the NDA, look at the CIM or our Sales Memorandum and make a quick decision on passing on the business as a potential acquisition.

Here’s 3 reasons why we suggest as a Buyer, you should not pre-judge or make a snap decision like this until you’ve talked with us or the actual seller themselves.

# 1) Everything About the Firm Might Not be in the CIM or Sales Memorandum

Although we try to cram as much information about the seller’s business into our marketing documents, there’s only so much room and there’s often information that doesn’t make it into our CIM or Sales Memorandum that is only revealed when you actually talk to the owner of the business.

# 2) The Asking Price Might Look High and it May or May NOT be Negotiable, BUT the TERMS are usually Negotiable.

And by Terms I mean things like how much transition time you want the seller to give you after you close on the acquisition of their firm. If you want the seller to become an employee post close, what level of compensation do you want to give them? Is it a simple salary or some performance or commission based comp plan, or a mix of both. Do you want them to sign a simple non-solicitation agreement on their client base OR are you asking them not to offer accounting services to anyone within 60 miles of their current firm. These are some of the terms you can negotiate with the seller on.

# 3) After Talking With The Owner of The Firm you Find out it’s Close to OR a Perfect Fit for you and now You’re Willing to Offer More Than you Originally Thought.

We’ve seen situations where someone like you gets on the phone with our seller. And during the call the seller reveals something about their client base or their staff, or how they set fees and bill their clients or even some genius way they attract high value clients through some hidden yet transferrable relationship they have OR a quirky referral technique you’ve never heard of. And suddenly something clicks with what the seller is sharing with you and the firm you originally thought was a SKIP is now almost exactly what you were looking for.

The point is you would have missed a good or even great opportunity to acquire the business had you not talked directly to the seller of the business.

There’s an old saying that you can’t judge a book by it’s cover. Likewise you can’t judge the potential fit of an acquisition by just looking at the listing on a website or even the CIM or Sales Memorandum. Talking to the seller is usually worth 30 minute phone call to see if it is the diamond in the rough you’ve been looking for.

As always if you’d like more information or if you have a question about an accounting practice acquisition, put it in the Comment section or go to our website, click the Contact Us page and ask your question. Or you can always email me your question at jeff@acctsales.com and I’ll answer it for you.