In our experience, the majority of practices are sold between 0.9 and 1.3 times gross costs. Note that most of Poe Group Advisors` accounting practices are sold at a fixed price at closing. We will devote a section to the conditions below, but unfortunately, for transactions with quota conditions, much of the practical value may be lost due to poor transitions and poor service after conclusion. If you are buying or selling a CPA company, your sales contract should cover precisely, in full and simply these five essential terms and conditions. 2. Size – There is a “Sweet Spot” for businesses. In general, there are more buyers for audit firms that can be purchased and operated by a single owner. Firms under $1500,000 generally fall into this category. 1. The essence of the non-competition clause is to prevent the seller from serving the customers of the practice sold. The non-compete agreement should cover a complete list of all customers sold and all customers held by the seller (if applicable).
The seller should not be able to serve or promote the company`s customers, regardless of distance. 3. Understand some of the types of clients in the practice, which includes sectors, longevity and complexity of the work. 3. Buyers should ensure that their non-compete agreement is enforceable under local law. Most jurisdictions do not impose non-compete agreements that cover too much geography or too long. Often, contracts can become long and repetitive. This can be extremely problematic if it leads the parties to lose sight of what is really important. A successful sales contract is written in such a way that everyone understands the terms of the contract and can move forward on time with ease and security. If you missed our last podcast with Chris Sloan about contracts, this is a great resource you can see. Chris has a very rare and refreshing approach to creating contracts. The key to a successful transition is to have the right buyer for the practice to sell.
Otherwise, the previous 4 concepts will not really be important. Make sure professional experiences, management styles, and customer service philosophies go well enough together. Also remember that non-competition has tax consequences. . . .