While accountants are used to the term “full disclosure” in their profession, when it comes to marketing the sale of their accounting firm, confidentiality is necessary.  There are many reasons for confidentiality during the sale of a practice, but here are a few to note:

  1. Unnecessary anxiety: Notifying staff of a possible change in ownership can cause unneeded anxiety.  Staff can tend to think that when a new company takes over, they will be terminated.  The assumption of termination may cause them to dust off their resumes and find employment elsewhere, ironically trading one anxiety (change in ownership) for another (new employer and new client base).  In most cases, gaining experienced staff in an acquisition is as important to the buyer as gaining new clients.  Staff are an integral part of the success and value of the firm.
  2. Decrease in productivity: In their anxiety (fear of change), staff can become less productive.  Their thoughts may tend to dwell on the future and not on servicing the clients.  Things may take longer to be produced and occasionally the task may be forgotten altogether.  Profits are lost and employee performance suffers.
  3. Client reaction: Owners (or staff) informing clients of future change in firm ownership can cause the similar fear of change response in the client base. Clients may decide to make a change in accountants before (or shortly after) the change of ownership takes place. This causes a decrease in the value of the firm via lost revenues, a detriment to both seller and buyer.  The clients who depart often must develop a new relationship with a new firm.  If they had stayed to develop a relationship with the new owner, it may have been better for them.  After all, the seller understands the clients’ needs and is looking for a buyer with the technical abilities and business philosophy to best meet client needs.  The seller is most often available during the transition to ensure the client will continue to receive exemplary service.

The proper management of information (in this case confidentiality), helps all involved.  Sellers, buyers, employees, and clients can all benefit from the proper use of confidential information.