When to sell your accounting practice?

[nickmcpa]

Accounting practices typically sell between June and October. The entire transaction can take anywhere between 3 and 4 months. Few to none sell during tax season. As you know, besides returns and extensions, not much else gets done during tax season....and maybe some drinking :0

If you have any questions regarding retiring or selling your firm, shoot me a message.

[IRonMaN]

So if your office is in the middle of a liquor store, does the liquor store feature add value to your tax practice when it is time to sell?  

[PATAX]

@IRonMaN if that liquor store sells Fireball, then I would think that Brother Cooley may know the answer to your question.😉

[IRonMaN]

Based on his recommendations, Fireball is all that is sold there. 😁

[George4Tacks]

Before it is too late. I helped a friend by a small practice from the sister of the practitioner that died at his desk on October 10. He was living with his sister in a small retirement community after moving this practice to being remote from the small home office. 

I sold my practice too soon. I picked 65 to sell. Fortunately I sold for a high enough price to make retirement financially successful, but I was amazed at how much I miss the challenge of this business. 15 years later I am still here and working seasonally with some old competitors. I also love hovering around this site and I do have my stash of Fireball, both candy and booze, so I am quite content with life.

[IRonMaN]

I don't plan on selling.  I am going to slowly phase out and my last day will probably be the day the undertaker comes for me 😀

[PATAX]

@IRonMaN What is becoming increasingly evident, due to the overwhelming nonsense inflicted upon tax professionals, is that many tax professionals may not be able to sell their practice at the desirable amount,  if they are even able to sell it at all. Why would another CPA buy someone's practice when most CPAs have sufficient work? But what do I know?

[nickmcpa]

Not retiring is also an option! Glad you got back into the fight. Black coffee and Jack have always been my poison. The occasional tootsie roll also. 

[nickmcpa]

If done properly and the seller is realistic, the firm can/will be sold. 

Unrealistic seller = Trying to sell a 1040 mill at a 2x multiple 

[nickmcpa]

Brother Cooley reference went right over my head! I'm either too young for that reference or too new to this forum. Help?

[IRonMaN]

Too new.  Brother Cooley refers to one of the regulars here that retired last year.  His favorite hobby evidently was to enjoy a Fireball whenever he could.  Actually, he said he was retiring, but this is the internet so he could be in detox trying to kick his Fireball habit.

[PATAX]

@nickmcpa Brother Cooley was one of the best.

[nickmcpa]

Wish I got in here earlier. Brother Cooley is a kick a** name

[PATAX]

@nickmcpa When Brother Cooley came out of the blue and told our friend QB to drop dead was hilarious. I am still laughing. 

[IRonMaN]

Mr Fireball is of the age that the filter has long ago worn off so he says what he wants when he wants. 😁

[Accountant-Man]

I sold at 65 y.o. two years ago. Buyer pays me over 4 years, so I have two more to keep active maybe 5 hours a week during tax season.

I still do all 1041s, so I have brain cells left.

FYI, we made the deal in September/October 2022.

[nickmcpa]

Congrats on the sale! Collection deals scare me. In a perfect world, they work. I've seen buyers up and leave. Also have seen buyers cherry pick clients at their leisure. 

[Accountant-Man]

Well, we let go the ones that are PsITA.

I bought three practices over the years, and the fairest payment is future revenues, not past experience. Both losses and newbies are used.

We have no non-compete, but I ain't taking on new clients on my own.

[TaxGuyBill]

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@nickmcpa wrote:

have seen buyers cherry pick clients at their leisure. 

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That is an interesting point; I never thought of that.

If the payments to the seller are based on the clients that return, all the buyer would need to do is cherry pick the ones that he wants and drop the rest, to avoid paying more on the non-cherry clients.

[nickmcpa]

It's scummy. We've seen it happen more than you'd think. 

Collection deals are fantastic for the buyer. Horrible for the seller.

I'm a sellers broker - hence why I don't do collection based deals.  

[TaxGuyBill]

Yeah, that is super scummy.

I tend to be naive and think people will do the 'right' thing rather than thinking up ways to ripoff other people.  I appreciate being warned about things scummy things that some people do.

[qbteachmt]

My Father (a Lacertian) kept his practice when he downsized to "work from home" in a senior living apartment. He picked up a few clients from that building. But he started to be demented and didn't do his own taxes. It's an example of the study that found music and other busy work tends to keep the dementia at bay for that specific task, I guess.

When I finally had to go in person to deal with his end of life issues, I found quite a mess. I went to his "coordinator office" (a shared workspace that really just gave him a business address and a receptionist when needed) and shut everything down. Then I went to the nursing home and told him, "Dad, you're retired."

So at that point, there is nothing left to sell.

And don't overlook the issues of record retention.

I also shut off his Lacerte license (with the help of folks here) and the IRS authentications.

[Accountant-Man]

Truly, so that's why we have contracts.

I had plenty of clients that I would only wish on my worst enemies. They usually leave on their own.