The two most frequent times for firms to address merging, acquiring, or selling are right after busy season and right after the summer in advance of next season. So now, with tax season in the rear-view mirror, it is highly common to have the “urge to merge.” This urge can be great if you have the discipline to orchestrate a deliberate and controlled process. But without a process, the urge, much like any other emotional reaction, can bring unwanted consequences.

As you explore your options, here are five crucial steps to ensuring that urge is balanced by prudence:

1. Create a scorecard to support the outcome you are looking for. A workable scorecard will have five goals that should be ranked and rated. The scorecard will allow you to better focus and evaluate the potential benefits that may come from deals from different firms.
    
2. Frame your firm to be appealing without embellishing or over-selling. No firm does everything right and no firm does everything wrong. A balanced summary of the highs and lows of your practice – in the form of a table of top five successes and top five challenges — will go very far. Vetting the table with your staff and / or outside advisors will enhance credibility, and their input should be clearly revealed in the table.
    
3. Allow confidentiality and discretion to prevail. Empower a limited number of people to participate in the process and agree upon a short timeline for next steps and a method to share decisions both internally and externally. Resist the temptation to talk about the framework of the deal up front. Everyone knows the terms are important, but bonding, chemistry, and cooperation are going to influence the ability to reach a deal in the first place. Timeline non-compliance and protracted response times should be clear warning signs of disinterest and should be addressed quickly and politely.
    
4. Be ultra-organized. Agendas should be circulated ahead of all meetings and agreed upon. Notes and next steps should be memorialized and shared with the relevant players. Much like dating, the more attentive and interested and the better the follow up, the more likely you are on the right course. Be willing and ready to share the complexion of your firm with data on client demographics and staff. Most accountants are adverse to risk, so presenting the facts early on in the process will go a long way toward weeding out players who aren’t committed.
    
5. Be prepared to take your urge to the finish line. Do homework ahead of time on how deals are done so that as you move into negotiations, you can be effective. Talking with others who have successfully completed transactions, whether they be consultants, attorneys, or other CPAs, can be very productive. Many baby boomers are looking for an exit plan and many firms are looking for a better position in the marketplace so if you put time to good use all parties will be appreciative. There is much less patience with window shoppers and experimentation.

If you are serious about the upside of doing a deal, you will likely find the spring-summer months to be the optimal time to lay it all out. You’ll have plenty of lead time and all parties can be ready for the next busy season … and the next time the urge strikes.

Want to learn more?
Ira Rosenbloom will lead a program titled “Imperatives for Succeeding at Transitioning CPA Firm Ownership in Your Region” from 9 a.m. to noon on May 24 at Johns Hopkins University in Montgomery. Attendees will learn how to accomplish the right transition for their firms – whether it be internal or external. Get complete details and register here