checklists: top 10 tips for buyers and sellers.
by ira rosenbloom
many cpa firms go into merger conversations thinking that, because they have done deals before, they can do what they’ve done in the past. but in this covid-impacted economy, the tolerance for risk is low—and changing day-to-day.
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we’re seeing every day how much the pandemic can impair and alter both daily life and business fundamentals, so the more efficient you can be in getting ready for a merger, the better. these days, you need to move fast or risk losing out.
here are some recommendations crucial for getting both buyers and sellers properly prepared for their next step in m&a negotiation.
top 10 tips for sellers
- be data proficient. identify your top 10 kpis – they’re different for every firm. learn them like you know the back of your hand. use them.
- have a realistic assessment of your practice prepared so you know your true plusses and minuses and what impact they will have on succeeding in negotiations and timing.
- know exactly what you are looking for in a buyer, create a priority grid of what you want, and work from it.
- prepare an objective profile of your firm, including its history, its present reality, and the potential to be attractive to another firm.
- create a demographic matrix on your client population.
- quantify outsourced referral work form the previous three years and the nature of that work.
- create and confirm a timeline ahead of the m&a conversations and use checklists for all meetings and communications.
- develop a “line in the sand” list of what you won’t accept and vet it with an expert.
- create a hazard list of all things that you imagine could go wrong and use it early in your conversations.
- find a trusted adviser to help keep you focused and minimize the distractions and emotions that can come from a sale.
top ten tips for buyers
- know exactly what you are looking for, be sure you have consensus among other leaders along with marching orders for your requirements—and set a timeline early.
- prepare a marketplace assessment so you can know what to expect, what the candidates will compare you to, and how you will be perceived.
- address mutual anxieties early and openly. you can solve some worries but not all. the earlier the parties deal with this, the better.
- budget in detail for the integration and the vision of the combination, be sure you have an idealistic roi and a timeframe to hit. also, advise the seller accordingly.
- develop a “line in the sand” list and vet it with an expert.
- create a hazard list of all things that you imagine could go wrong and use it early in your conversations.
- be sure you have a flexible and well-defined technology plan which will allow for easy integration.
- develop a core attribute profile for how personnel will be integrated and share it early.
- turn to an attorney with a strong background in cpa firm mergers and their consequences.
- lead the process. live to a tight turnaround for information. set consequences. summarize conversations within 48 hours. test integration plans internally and with the target firm. instill confidence.
m&a opportunities are only good opportunities if they bring both parties what they want for the right terms.
each party needs to understand quickly what’s in it for them, which also dictates how quickly they can determine the terms that will address the risks and rewards.
if you work to get properly prepared for what’s ahead, your firm can reap the benefits and fully realize the power of combining with another firm for strength, growth, and firm longevity.
many firms come to the table thinking they’re prepared because they’re “ready” for the deal. and others think that it’s all going to work out because the other side has done this before—and they themselves don’t need to prepare.
but the stresses and uncertainties in today’s economy make m&a preparation essential. let me say it again: essential!