Buying a Certified Public Accounting firm is a quick way for an accountant to gain access to a client base and to jump start his career. Purchasing a CPA firm can be risky, however, so it is important to ask the right questions before going through with the deal. Asking the right questions can provide insight into the firm's operations and reveal critical information that will influence your decision to buy the firm and the price to pay.
Ask for details about the services that the firm currently offers. Compare these services to the ones you currently offer if you already own a firm. Consider whether or not these services make a good combination. If you want to diversify your offerings, look for complementary service offerings. For example, if you specialize in business assurance, it would be good to acquire a firm specializing in auditing, as these are two very different fields. On the other hand, you may opt to specialize and will want to know that the firm offers similar services.
Ask for information about how the firm interacts with clients. According to the "CPA Journal," you should ask "who does the work, and where?" If the firm does a lot of work directly at the work site of the clients, then they will expect this to continue. Be prepared to retain the same staff and have them continue this relationship, or to employ new staff and allow them to dedicate the same time and resources to the clients.
Ask what the firm's rates are and compare these to the work being done. According to the "CPA Journal," the buyer should look at the "time, effort, and level of staff that will be needed to complete the work." Compare this to the billing rates to see if you can make a profit. For instance, if you are able to perform the work more efficiently by investing in computerized systems instead of doing the work manually, you can earn higher profits based on the current billing rates.
Ask for details about the employees. Accountants will want to know the financial details such as how many employees the firm has, what wages they earn and the benefits they receive. Other details to ask about include whether or not employees have a noncompete agreement. If they do, this can prevent the employees from moving to a competitor when a new owner takes over. Ask for details about employee performance, including the strengths and weaknesses of the staff.
Ask if there are any liabilities not included in the financial documents. Accountants are trained to recognize the significance of loans and other tangible liabilities that are included in the financial details, but they should learn about other liabilities such as pending lawsuits or regulatory fines. Consult a lawyer to determine the effects of these.