Selling Your Practice

Please contact us to discuss your practice and your future plans. Every practice is different and it’s important that we get to know you, your firm, and understand your future goals.

You can reach us at 855-428-2225 during the day or anytime via email at Admin@atbcal.com and we can coordinate a time for you to go over all your questions with the Broker. 

Confidentiality is extremely important to us and we understand that you don’t want everyone knowing you are considering selling. We will only contact you via the contact method that you provide us with.

If you choose to move forward after the introductory conversation with our Broker, then we will request the Seller Profile be completed. You may also complete this in advance if you would like to expedite the listing process, its completely up to you. This fill-in form provides us with important information to value and market your firm, completing it accurately and to the best of your ability will help create the best listing that we can.

You can download a copy of the Practice Profile Here.

Please feel free to reach out if you have any questions or need assistance. There are different tax software reports that could help, such as the Tax Practice Summary Report in Lacerte, or other similar reports available in select accounting programs. Some Sellers also have client revenue information available on excel that we can use. Any data to extrapolate client demographic and billing data is also helpful.

We review multiple data points on every firm to  provide the Seller with our honest opinion of current Market Value. Accounting and Tax practices are generally valued based on multiple factors including; Practice Specifics, Seller Discretionary Net, and Gross Income .

The Practice Specifics with the largest impacts to your value include; average fees, number of clients, types of returns, age of the clients, willingness to finance, leases, equipment, percentage of clients who are virtual vs in-person, location, license requirement, and pending litigation.

Every practice is individually evaluated for maximum potential. We provide input with regard to our market valuation however you, as the seller, have the ultimate authority to set the asking price.

Most Buyers and Sellers are familiar with the “100% of revenue” valuation. However, this isn’t always the case. Most firms will realize a value between 85% to 130% of revenues, which will also be in the range of  2x-2.5x SDE.

Example, even though the gross revenue is exactly the same; A firm with 1,000 clients and an average fee of $200 will generally be valued less than a firm with 100 clients and a $2,000 average fee. However, if the 1,000 client firm has much lower overhead and is completely virtual then it could ultimately be valued higher than the other practice. 

Every practice is different, which is why we treat every market valuation differently. Cookie cutters are only for cookies.

Once we are able to discuss your practice, future, terms, and potential market value, we will prepare a draft listing agreement for you to review. We want everyone to take their time and review the listing agreement. You may also want to review the listing agreement with your attorney. We will be here to answer any questions that you, or your attorney,  have about the agreement before you sign. Once you are ready, we will send a final version for signature.

All of our listing agreements are exclusive due to the amount of time and money we put in right from the start. Making this process as easy as possible to navigate is what separates us from the others. We know that your clients are important to you, and that makes finding you the right buyer important to us!

Any Buyer we bring to you has already provided us with their private contact information, experience, and license information, in addition to details on the type of practice they are looking for and an NDA. We review this data and, if it looks like a potential match for your practice, we will then request an introductory meeting. Buyers that do not have the proper license, experience, or other fitment that your practice needs are suggested other firms that may be a better fit.

There are quite a few looky-loos as well as people with no experience who like the net profit percentages of a professional business. Some of these individuals/businesses want to purchase a firm thinking it will be run by the current staff, or it will be easy to hire an EA or CPA to manage. If your firm doesn’t fit that model then we are saving you countless hours of responding to inquiries that are going nowhere. Let ATB do the weeding for you! 

We take a “hands on” approach in establishing business relationships.  Utilizing technology, networking, and old fashioned hard work we are able to reach the most qualified buyers.

In general, we use every avenue for marketing that we can. You can find online advertisements through our website, multiple business brokerage sites including those that are specific to the accounting industry. We also send mailers to all practitioners in CA and frequently exhibit in person at multiple organizations and education seminars, including; CSEA, CSTC, Spidell, CalCPA, Gear-Up, IRS Tax Forum and more. 

Our agents, brokers and staff are reaching out and communicating with individuals in the industry every day, speaking and meeting with accounting and tax offices throughout California. This approach allows us to create a personal bond with those who want to buy or sell.

Even though we try, we don’t know your clients or your firm as well as you do. Its very important for Sellers to take the time to speak with multiple buyers. Its during these conversations that you learn if the Buyer is acceptable for your practice or not. It takes 45minutes to an hour and it also provides us with more details to further refine the Buyers we send to you in the future.

The worst thing you can do is rely on limited written information to disqualify a Buyer. If you don’t speak with anyone then you will never sell your practice. You may waste a few hours on Buyers that will never be able to take over your firm, but in the long run that is extremely important to the process. 

The initial introductory conversation is to get to know each other. You want to gauge, experience, education, future plans, personality and how well the individual can relay those items to you and therefore to the clients. You are free to ask any questions about the Buyer in order to get a feeling for them. Think of it from a clients prospective too, what will they think of this person?

The Buyer will also be asking questions, but not as concerned with your education or experience. They generally want to know about typical practice operations, procedures, plans for the future, client interactions, types of clients, types of returns, etc.  

The first introduction is usually a conference call, or a zoom if there are more than 3 people involved. The Broker is always on the first few introductions just to make sure everyone is comfortable and asking the right questions, and then its up to the Seller if they want to talk with people on their own or want the Broker to continue being on the call. 

If all goes well on the first call then we either request a Letter of Intent from the Buyer or we set up an in-person meeting to further cement everyone’s interest. 

If everything goes great after your meeting(s) then we get in to the Letter of Intent (LOI) stage. A lot of Buyers and Seller think that Due Diligence should come next but we prefer an LOI. This saves both the Buyer and Seller from providing sensitive and private financials, credit reports, etc. if there is no hope that an offer can be agreed to. 

Example: If the Buyer is great in person but then wants to buy the practice with no down payment and pay the remainder off over 10 years, then its very likely there will be no deal. It would be extremely disappointing if this was found out after due diligence and you shared all the private data with that person. It works the other way too, what if the Buyer can offer 50% down and is a great person but you won’t consider anything less than 80% down, its better to know that an agreement, even in theory, can be made before due diligence. 

Once an LOI is agreed to, or accepted, we move to disclosures and schedule Due Diligence. The actual act of Due Diligence is between the Buyer and the Seller and as accountants everyone should be pretty familiar with what to request in this step. If you were advising a client on what to look for what would you recommend they look for? Due Diligence is to verify all your assumptions and the information we & the seller have provided is correct.

We do not have a list of items that should be reviewed for due diligence because every transaction, seller and buyer is different.  

Buyers generally want to verify income, expenses, that the clients are real, how the work is performed, that the work is being done properly, spot check some returns, review employee data & pay, and more.

Sellers generally want to ensure the Buyer is licensed, has the proficiency to perform the same services as you, has the credit to perform, down payment required, Seller can spot check some of the buyer returns, talk to staff, and more. 

This is not a list of items you can use for due diligence purposes, its a representation of options but there are endless ways you can review and request data from each other.  

We provide an additional confidentiality agreement when its time for Due Diligence. This is required to satisfy Circular 230 disclosure regulations on client data.

We can provide the Asset Purchase Agreement based on the accepted offer or the Buyer/Seller can have one prepared by their attorney. 

If we provide the APA tehn its completed based on the accepted offer and typical terms of a sale. We will communicate with both the Buyer and Seller to ensure all terms are as anticipated and then send for electronic signature.

This step can be a multi week process depending on responsiveness of the Buyer, Seller and any Attorneys involved in the review. 

The APA will be required by the Lender if the Buyer is getting bank financing. It’s important that this step be completed as efficiently as possible because the APA will lay out timelines for any contingencies agreed to in the LOI.

We do not ever use a “Sign and Close” type of contract. We want everyone to agree to all terms 30-60 days in advance of closing. This helps negate any delays at closing. The APA will contain a future closing date, contingencies and timelines based on the transaction specifics. 

We can perform escrow services in-house as long as there is no real estate security involved or required by the lender. We provide the Escrow service as a complimentary service for our clients but we do request reimbursement for actual costs including UCC/Tax/Judgement Lien Searches & Filings plus any costs associated with Lien/Loan Payoffs and EDD Buyer Release Requirements. However, you can also use an outside escrow service and split the cost with the Buyer.