firms competing in the buyers’ market need to put on some polish.
by 卡塔尔世界杯常规比赛时间 research
the rosenberg map survey: national study of cpa firm statistics
the accounting industry is seeing an upswing in mergers and acquisitions after a slowdown during the pandemic confusion.
more: why solo cpas need pcas | where mergers go wrong | what your merger letter of intent needs | 61 things buyers should explore with sellers | thirteen ways to woo potential firm buyers | one times fees isn’t the only way | four reasons to fear a merger
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the reasons, according to consultants quoted in the 2022 rosenberg survey, are several:
- sellers are looking for viability as partners retire.
- sellers are looking for funding to upgrade tech and shift to cas.
- buyers are looking for scarce personnel.
- buyers are looking for specialized niches.
- buyers are looking for something to tempt private equity investment.
what kinds of tips are available for buyers and sellers?
more than mere growth
terry putney of transition advisors, contributing some subjective observations to the survey, says that firms on an acquisition hunt are looking for more than mere growth.
“firms pursuing growth through m&a are increasingly passing on acquiring general tax and accounting practices and practices that can’t deliver staff and potential partner ‘benches’ to replace retiring owners,” putney says. “the larger firms are not, for the most part, just chasing volume with their mergers. they are much more targeted, looking for niches such as cybersecurity, it management and family office, staff expertise and geographically attractive expansion into both new and existing markets.”
putney also notes that private equity investment is beginning to inject capital into the accounting industry.
the pe wild card
private equity is a wild card, a new financial influence entering the accounting industry. so far, pe’s interest has been in big firms, but smaller firms are interested in pe. will they ever get together? will the magic ever happen?
marc rosenberg – the founder of the survey, which the growth partnership now conducts – is a leading expert in m&a, and even he isn’t predicting much besides questions.
“[private equity is] certainly the biggest new trend in the cpa firm industry,” rosenberg says in the survey. “initially, it was geared to megafirms, but it’s starting to trickle down to large firms below the megafirms. what’s the future of private equity? will it catch on? will it ever invade the domain of $5 million to $30 million firms? stay tuned.”
unless something goes awry in these initial ventures, pe isn’t likely to go away. quite to the contrary, it is being attracted by the recent increases in profitability, which inspires buyers, crossed with shaky staff and succession situations, which inspires sellers.
buyers’ market
art kuesel of kuesel consulting says, “private equity began to target the profession as a stable, profitable investment and infused firms with cash and funded buyouts.”
at the same time, kuesel sees merger activity heating up as a solution to serious problems in succession, staffing and upgrades to technology.
with a general need for technology, talent and new service offerings requiring investment, and with pe companies eager to fill that financial void, allan koltin of koltin consulting sees m&a heating up even more.
“one should expect to also see a record year for cpa firm m&a,” koltin says. “don’t be surprised if more mergers amongst the top 500 firms occur in the next 12 months than any 12-month period in the profession’s history!”
koltin says he wouldn’t be surprised if most of the top 20 firms opted for pe participation. but he also issues a caveat: a recession could change the course of structural strategies, though, in recent years, cpa firms have navigated economic downturns reasonably well.
given all the above, it’s a buyers’ market. smallish firms will have to get their houses in order as much as possible if they hope to sell their problems to somebody with money and dreams.