Is it a seller’s market, or a buyer’s market? The answer is yes to both questions, depending on where you are located and how large your firm is.
If you are a small, 1 to 3 partner firm located in a strongly populated region of the country, it is likely a seller’s market for you. In a challenging economy where firms are struggling collecting their own billing, let alone growing organically, the interest in growing through an acquisition is significant. Also, smaller firms can frequently be absorbed by larger firms with little incremental increases in overhead making the acquisition even more profitable.
If you are a small firm or large one, but you are in an area of the country where there are a very limited amount of other firms, supply and demand takes over and likely mitigates the strength of the market from a seller’s perspective.
The small regional firm is starting to lose their value as more and more firms their size realize they cannot execute an internal succession plan and are forced into merging up. With fewer firms in a position to take on these practices than exist, we are seeing a drop in their value and expect this to get worse over the next 5 years not better.
The big boys keep getting bigger as the regional firms and larger continue to aggressively bring in mergers and acquisitions and the consolidation of large firms continues.
For a more detailed explanation of the trends in today’s market, click on the link below for an article from the Journal of Accountancy this past November that drills down much deeper on the subject.
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