I’m Ready for My Close-Up!

Since — if you’ll pardon the obvious and intentioned pun — I’ve “transitioned” from my former post to the consulting arena, one of the questions that has been repeatedly asked (aside from how’s the new gig going?) is “How do I know my firm is ready for a merger?”

That’s a tough one because, much like putting a house on the market, it has so many moving parts. I often joke that when we sold our condo, it never looked better — in fact, I almost had seller’s remorse.

But I digress.             

Obviously, making your firm “beautiful,” if you will, for a merger or acquisition is far more complex than selling your home and extends well beyond the cosmetic. I’ve been in more CPA firms during my time covering the profession than anybody should have to by the rules of the Geneva Convention and, guess what? If you removed the signage, you’d be hard-pressed to tell one from the other. They all have offices, cubicles, computers, and acres of filing cabinets (so much for paperless.)

No, getting it ready for a transition requires a deep understanding of your firm and whether under its current structure, personnel, and workflow, it’s ready to become part of a larger entity or conversely, ready to absorb another firm.

Perhaps much like when your spouse sends you out to the supermarket to “pick up a few things” and two full shopping carts later you find yourself on the check-out line, maybe you have go old fashioned and compile a list.

For one, understand the reasons you want to merge and ask yourself do you truly know your firm’s metrics — and not just gross billing or net profit. Are your clients brand loyal or partner loyal? If you’re a small 2-3 partner firm, almost unanimously, your clients are partner loyal. And will the partners still be there? Who are your key people and which of your staff probably won’t be accompanying you in the succession plan?

What about your IT systems? Are you a progressive firm, i.e. paperless and in the cloud? Or is your staff still using DOS? What about your current space or lease? Are you locked in to a multi-year contract and can your space be expanded if necessary?

In my still relatively short tenure in consulting, I continue to be surprised as to how many CPA firm owners state that they want to “do a merger” yet have little or no idea of what it entails on their end.

Unfortunately, many have learned that — unlike models in a glossy magazine or panoramic photos of homes in a real estate brochure — you can’t easily airbrush a CPA firm.