Some People We Just Can’t Help – Part 2

One trait I have always admired in people is an entrepreneurial spirit.

As an example, the temperature in the New York area approached triple digits this past weekend and on my way to cool off in our town pool, I noticed a girl about eight years old, patiently sitting next to a makeshift lemonade stand waiting for a customer. I was so impressed by that I had to stop and pay $1 for a glass of lukewarm lemonade.

I hope to be reading about this up-and-coming titan of industry in the not too distant future.

But in a vignette with folks closer to our age, I received a call from an employee in a mid-sized CPA firm in the Northeast, who, along with two of his colleagues, wanted to leave their present employer and acquire a firm that they could nurture and grow.

As you can imagine a request like that is not all that uncommon in our line of work – we field scores of emails and phone calls from entrepreneur-minded CPAs who hope to someday build a firm that will establish a strong footprint in their respective markets.

However, more often than not there’s the inevitable “but.”

The man informed me that the trio had not yet broken away from their firm and would not do so until they identified a target firm for an acquisition. So playing devil’s advocate I asked how they intended to fund a merger and an eventual buyout of the owners. And as an added bonus, I wanted to know what they planned to do with regard to an office location.

He informed me that they had accumulated roughly enough money for a 10-20 percent down payment and their plan was to relocate into the seller’s spaces. Their ideal range was a firm with billings anywhere from $500K to $1.25 million.

That’s where I sort of had to lower the boom and bring them back to reality. I explained no one was going to tender their firm to folks without a book of business and basically operating out of briefcases. I pointed out that without a proper client transition there would be no recurring revenue stream and all they would have done is basically buy themselves a new job – sans many former clients.

He thanked me but he remained determined to find a willing seller. I wished him luck and even forwarded some references that might be able to better help him.

Look at it this way, if he fails, I understand the high temperatures are going to stick around for a while and there will always be a market for cold lemonade – no book of business required.