M&A and search activities are continuing during busy season

Upcoming retirements and economic cycle issues at the core

Yes, this is the busiest time of the year for CPAs, but I am seeing something a bit different this year. In the past, there was hardly any busy season CPA firm merger
and acquisition or high level search activity. This year is different. 

The many changes seen in the first quarter 08 economy versus first quarter 07 economy seem to hold true in the accounting firm M&A area.  My theory is that it might have something to do
with more partners looking at the slowing economy as a time to sell while other forward thinkers are thinking growth by acquisition.  Whatever it is, we are seeing an extremely ACTIVE market
unlike past busy seasons which tend to be the quietest historically.

For the past several weeks, my firm has been in process with several potential buyers and sellers.These buyers and sellers are not the larger or medium size firms where the
managing partner may have the time to devote to this type of strategic activity.  These are firms of 5-75 people where all of the partners have significant client responsibilities. 

On the search side , we are actively working with some partners currently with well known mid sized firms.  These individuals will not be leaving their firms during this busiest time of the
year, but they are having first and subsequent meetings now with the idea of landing a better opportunity in the spring .

What accounts for these changes ? 

Retirement minded partners, succession issues and a slowing economy.

The potential sellers feel the pressure of needing to find the right upstream merger because of the desire for senior partners/founders to retire and quite often these firms have
very severe staffing issues that may impinge on major client retention . 

Regarding partners seeking a new opportunity, it’s much the same. Up and coming partners in their 30’s and 40’s look ahead and have real issues .Are the most senior partners proactive
and progressive about the future of the firm?  Are they fair about compensation ?  The answers that I hear are generally a resounding no . In most cases , the younger partners have had many
conversations internally about these issues and know deep down that nothing willchange until it is forced due to illness or some other external factors.  That creates uncertainty for the
younger partners and is the reason more are open to conversations currently. 

How are you and your firm reacting to these changes?

Posted by Robert Fligel, CPA on Wed, February 27, 2008 - 4:24 pm EDT

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