In a perfect world, the answer would be that we operate daily as if we were selling the firm tomorrow.  The reality is that, due to various constraints, accounting firm owners must prioritize daily activities and related operation measurements, then play ‘catch-up’ on other activities/measurements.  In smaller firms, it is easy for the owner to know how operations are going because of their intimate involvement in day-to-day activities combined with the use of key measurements of operations and related profitability.

When the owner is at a point when they want to sell their firm, more complete documentation is needed for prospective buyers to use in their decision process to buy (or not buy) the accounting firm.  Many firm owners make the decision to collect the needed, more-comprehensive documentation shortly after April 15th in the year they want to sell the firm.  In today’s world of extended tax returns the ‘busy season’ is stretched to October 15th.  Thus, the owner is trying to gather information while still putting out fires and meeting various deadlines.  It is overwhelming to most and certainly counter-productive.

In cases where the owner doesn’t perpetually gather all the required information, the next best scenario would be to begin a few years before a target sale date.  This allows the owner to adjust operations to maximize the value of the practice via reflecting a recent, consistent history of success.  Barring the two prior scenarios, the ideal time for a complete document collection is the November/December when most deadlines have passed and the practitioner can concentrate on the task plus formulate a transition strategy.  This puts the seller in an offensive position rather than a defensive position in their sales efforts.  When ready to list the firm for sale, the practitioner need only update a few months’ activity.

For maximum exposure to prospective buyers, it is best to list a practice for sale as soon after April 15th as possible.  Many serious buyers start the process early.  If a seller waits until the summer or even as late as October, much of the selling season has passed and prospective buyers have already engaged with other sellers.  For this reason, it is very important to gather the information before the year of sale.  Waiting until April or afterward, when exhausted and still having extension work to complete, is the worst of scenarios.

Most firm owners have never sold a firm.  Seeking the service of an experienced business broker who specializes in brokering accounting firms in November/December prior to the year of intended sale is wise.  Business brokers can provide lists of information needed to best position the firm for sale, explain the process and prepare a marketing strategy tailored to the firm being sold.  Firm owners need to follow the advice they give their clients: “seek the advice of a professional”.