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The Complete Guide to M&A of CPA Firms

By Cindy Ragan
CVA, Economist

Digital Books

The definitive guide to CPA firm M&A.

Written by Cindy Ragan, CVA — drawn from 28 years and 180+ closed transactions. The book every owner, partner, and acquirer should read first. This Guide documents every step of the process complete with financial analysis, compatibility and risk, legal contracts and dozens of useful lists, forms and procedures. But perhaps more valuable, are the many real life examples included that demonstrate how other firms have handled specific negotiations, financing, consulting agreements, and dozens of other issues that necessitate careful consideration and resolution.

Description

The book is approved by the Board of Accountancy as an open book test for 10 CPE credit hours and is considered the definitive guide to the mergers and acquisitions of CPA, tax and accounting firms. It documents more than two decades of transactional experience into a clear, practical reference for owners, partners and acquirers.

Table of Contents

tocprologue

chapter1

  • Introduction
  • Acquisition Strategies
  • Acquisition Analysis
  • Acquisition Plan
  • Buy-In, Buy-Out Strategy
  • Buy–In Question/Answers
  • Operating & Buy-Sell, Issues
  • Frequently Asked Questions
  • Merger Business Plan
  • Merger Issues
  • Smaller Firms Buying Larger

chapter2

  • Performance Evaluation Summary
  • Valuation Charts
  • Valuation Outline
  • Market Comparison Chart
  • Attributes that Add or Diminish Value

chapter3

chapter4

  • Compatibility Issues
  • Compatibility Analysis
  • First Meeting Itinerary/Interview
  • Merger/Acquisition Questionnaire
  • Characteristics of Buyers and Sellers
  • Buyer Profile
  • Confidentiality Agreement

chapter5

  • Economies of Scale Summary
  • Financing the Transaction
  • Owner’s Compensation and Add Backs
  • Information Required by Banks
  • Economies of Scale Summary
  • Acquisition Analysis
  • Payout Analysis
  • Combined Economies of Scale # 1
  • Combined Economies of Scale # 2
  • Monthly Projections, Small
  • Monthly Projections, Large
  • Term Sheet Financing Assets & Liabilities

chapter6

  • Letter of Intent Issues
  • Allocation of Purchase Price
  • Payments Based on Collections
  • LOI One Year Adjustment – Blank
  • LOI One Year Adjustment – Sample
  • LOI Payment Based on Collections

chapter7

  • Due Diligence List Small Firm
  • Due Diligence List Large Firm
  • Due Diligence In-depth Questionnaire
  • Technology Questionnaire
  • High Risk Clients – Questionnaire

chapter8

  • Summary of Legal Documents
  • Bill of Sale (Blank)
  • Covenant not to Compete (Blank)
  • Escrow Agreement (Sample)
  • Certificate Of Seller’s Officers (Blank)
  • Corporate Resolution (Blank)
  • Guaranty Agreement (Sample)
  • Sample Asset and Purchase Agreement with all Exhibits
  • (Special Supplement for Contracts, Call for Prices)
  • Asset and Purchase Agreements (APA)
    • Blank APA with Exhibits
    • APA for Certain Assets (Blank)
    • APA of SEC Clients (Sample)
    • Real Estate #1 (Sample)
    • Real Estate #2 (Sample)
  • Buy/Sell Agreement – No Equity
  • Partnership Agreement (Blank)
  • Operating Agreement for LLCs (Blank)
  • Operating Agreement (Sample)
  • Shareholders Agreement – Short (Blank)
  • Shareholders Agreement – Long (Sample)

chapter9

chapter10

  • Transition Items Checklist
  • Post Closing Items Checklist
  • Letters to Clients about Sale/Merger #1
  • Letters to Clients about Sale/Merger #2

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From Blog

Many of our competitors promise their clients all cash deals. But we have found that those are the worst M&A transactions for long-term success, for both parties.

If the Seller gets all cash at closing then he/she has no incentive to carefully transition the clients over time, and it takes time. Instead, they are off sipping martinis, believing they got the best deal ever, only to find themselves in court a year later.

Once the Buyer realizes that he/she is not going to get all of the clients/revenue that they paid for, they litigate. And a majority of the clients won’t transfer without Seller involvement, so attrition will be high.

We know this because they call us as expert witnesses. In addition, all cash deals get lower multiples because all of the risk is with the Buyer, so they pay less.

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