How to Keep Clients after an Accounting Practice Sale: Buyers and Sellers Both Must Play Leading Roles to Ensure a Smooth Transition and Maximize Retention
[ILLUSTRATION OMITTED] Risk is inherent to any business activity, including the sale of a CPA practice. From the seller's perspective, minimizing the major transitional risks after selling a CPA practice should be considered as important as maximizing the sales price and terms. A failure by the buyer or seller to execute a successful transition after the closing of the sale can be detrimental to client retention. The following fictional narrative, based on actual events, sets the stage for discussion. Imagine that you own a growing and successful multimillion-dollar business. Your family and your business have been the clients of a CPA in the local community for more than 15 years. You now rely on the CPA to provide significant tax, accounting, and business expertise. In fact, you are not quite sure what you would have done without this CPA's valuable advice for the last 15 years. Your CPA calls you to set up an unanticipated meeting at your office. At the meeting, he introduces you to a CPA you have never met before. It becomes apparent that your valuable adviser has sold his CPA practice to the individual he just introduced you to. At the end of the meeting, the buyer of the accounting practice hands you an engagement letter related to services to be provided to you personally and for your business. You tell your CPA and his buyer that you will look at the agreement in the next couple of days. As you consider whether you should sign the buyer's engagement letter, you begin to compile a list of the factors that would likely make or break your relationship with the person who may soon be your new CPA. Let us assume for a moment that the buyer in the example above is a great fit for the practice in every respect including professional qualifications, people skills, firm culture, and the capacity to perform the seller's work after closing. Even with a great buyer, what happens within the first few weeks or months of a transition can have a significant effect on client retention. From the perspective of both the buyer and seller, many potential issues could lead to the loss of this hypothetical client. Some of the factors important to ensuring a successful transition and minimized client attrition are as follows. CLIENT COMMUNICATION AND REASSURANCE As indicated in my November 2015 JofA article "Maximize Proceeds in Accounting Firm Sales" (tinyurl.com/pj9j5zq), the most important aspect of any deal from a seller's perspective should be whether the buyer has the qualifications, ability, capacity, desire, and incentive to provide quality service to the seller's soon-to-be former clients. A prudent seller will go to great lengths to meet with multiple buyers in the interest of selecting the best buyer who meets all of these criteria. It is crucial to effectively communicate to clients that the seller has invested extensive efforts to find the right buyer--as well as the reasons this particular CPA (the buyer) was the best qualified for the practice. When clients are uninformed, they may erroneously conclude that the only criterion used in selecting the seller's replacement was finding the highest bidder. Such incorrect assumptions can prove detrimental to establishing the preliminary footing necessary for good relationships to materialize for the buyer. When first discussing the transition with clients, the seller should take steps to reassure them about the buyer. Inform them about the extensive search that was undertaken to find a highly qualified CPA who would be the best fit for the firm's clients. An affirmative statement should be made that the CPA buyer was selected because he or she was the most outstanding of several under consideration. The seller and buyer should also highlight any unique aspects of the buyer's experience that may be relevant to the clients' needs. Explain that the buyer will begin taking the reins of the firm while the seller begins to reduce his or her involvement. …