Is Your Firm Ready for a Sale?

With one daughter out of college and another a year away from graduating, my wife and I have made the decision to put our house on the market within the next two years.

Where we are going to live after that is the subject of a rather wide disagreement between us – she’s looking to eventually settle in the Mid-Atlantic region, while I have my sights squarely on the Sunshine State. But that’s fodder for a future discussion.

But first things first.

Topping that relocation agenda is a number of home improvement projects that I have inexcusably procrastinated on. I won’t bore you with the details, But once completed, I’ll expect that our home will be in fighting shape so to speak and ready for the (hopefully) highest bidder.

I imagine the same logic applies to a CPA firm that is near a transition. As long as the ship was sailing in the right direction both cosmetic and infrastructure improvements were no doubt pushed at or near the bottom of a “to-do” list. But now that potential suitors are lining up, owners and equity partners are no doubt paying a lot closer attention to what needs to be done to present their firms in the most complimentary light.

Yes, it’s critical to freshen up the reception area – the first point of contact for anyone – whether client or potential successor - as well as remove those stacks of paper resembling factory chimneys – you may not be paperless, but you don’t have to blatantly advertise that fact. I’m five foot 10 inches tall and I have been to firms whose paper stacks measured at least a foot over my head.

Also, it  would probably behoove you to have a rein on your firm’s key metrics.

Case in point.

When I once asked an owner what his firm was dropping to the bottom line, he shrugged and responded, “Whatever’s left after salaries and overhead expenses.” That’s not exactly what I would label as having a handle on the situation. If you aren’t on top of your firm’s key performance indicators or KPIs, why would any potential suitor bother to take a second look?

Perhaps the exemplary model to follow was the philosophy of one firm owner in the Northeast, who not only knew in real time his firm’s KPIs, but told anyone who would listen that his most important client was his firm.

And whether you’re thinking about succession or not, so should yours.