Four Ways to Increase Your Chances of Buying an Accounting Practice
At present there is a vast under supply of accounting firms Australia wide. Therefore, when a practice is both well located and properly priced, competition is likely to be fierce. As a buyer it is vital to understand what to do to rise above the pack and maximize your chances of success.
Tip #1: Become a Registered Tax Agent
In theory, it is possible to acquire an accounting practice without being a registered tax agent. For instance, if the vendor is happy to stay around for a number of years, you might be able to work under their tax agent registration whilst you obtain the requisite amount of full time work experience to qualify for your own registration.
In practice however not having your tax agent registration in place gives the vendor an easy means of disqualifying you as a candidate. Consider that vendors may be approached by as many as thirty prospective buyers when they place their practice for sale. As such, a seller will initially be looking to trim the number of applicants down to a shortlist. Applicants without a tax agent registration are easy targets.
If you do not have the relevant experience to apply to become a registered tax agent then it is time for some tough love. It is going to be extremely difficult for you to acquire. The absolute best thing you can do is start to look for employment that lets you satisfy this requirement. The alternative is persistent rejection and begrudgingly coming to the same realization in six months time.
Tip #2: Pre-Organize Finance
The right time to discuss financing an acquisition is at the very moment you decide you want to buy a practice. When there is buyer competition for a practice, vendors will take decisiveness into account. The absolutely worst thing you can do is waste a week dealing with your bank. Your delay will not only give other parties an inside track but also likely be viewed as a lack of enthusiasm on your part.
It is advised that you speak with an industry specific finance broker prior to engaging with prospective vendors. By ticking this box you can walk into meetings with vendors fully confident about your financial limits.
Tip #3: Write a Personal Profile
Given your first point of contact with a prospective seller is likely to be through email or a practice broker; it is extremely beneficial if you are able to provide a briefing document to sell yourself as a candidate. The ideal length of a briefing document is one page. Any longer and you risk the vendor switching off and glazing over important details.
Some good guiding questions to help you in writing a brief are:
-What are your qualifications?
-Why did you become an accountant?
-What is your career history?
-Why do you want to buy an accounting practice?
-What are your interests outside of work?
That last question might seem superfluous but it is absolutely essential that you differentiate yourself from other applicants. If everyone in the field is CPA/CA qualified then harping about the fact that you possess this qualification is not nearly as effective as talking about your passion for soccer. Going into depth about your responsibilities at work is generally less effective than talking about your love for your young family. Whilst these interests do nothing to highlight your aptitude at work, they can be quite demonstrative of your values and sell you not just as an accountant, but as a person.
Tip #4: Sell Yourself with Questions
“Telling isn’t selling.”
Should you be lucky enough to get face to face with a seller, remember the above adage as it is the favourite of many sales professionals. The basic premise of effective sales training is that in a good sales pitch, the prospect (in this case the vendor) should do the majority of the talking, directed by effective questions.
It is easy to fall into talking about yourself and your accomplishments when you feel like you are being grilled about your qualifications and intent. Do not cave into this pressure. When meeting with a prospective seller endeavour to make the conversation primarily about them and ask lots of questions.
Asking questions will also flag to you potential sensitive topics or “non-negotiables” the vendor may have in doing a deal. For example, if the vendor is adamant that the purchaser keep the business operating from the same location, a candidate who walks in and announces that they would like to move the business will create a strong negative impression. In this situation, if you later realize the position you have presented is unacceptable you may be permanently stigmatized even if you fully reverse your stance.
Summary:
In the Australian accounting practice market, supply continues to be scarce and buyer competition remains intense. In this sort of environment anything which can give you a minor edge could exponentially increase your chance of successfully making an acquisition.
This increased chance potentially equates into acquiring a much higher quality practice. Furthermore it may save you many extra months or years of searching. Given this saved time and energy can be instead spent building a business, the compounding effect from making a few small tweaks now can be enormous.
