ProHorizons - Accounting Practices Sales and Development Observations

Two-Stage Deal Structures: What is Wrong with Them?

Two-stage deal structures can work in certain circumstances. Basically, a two-stage deal structure is when you have an initial period (stage one) where the firm’s cohabitate together, typically into the buyer’s existing office, and then close the transaction and the have the seller retire at some future date (stage two). There seem to be some initial advantages. It allows for a longer transition period. It also allows for the buyer to not start paying the seller for the ownership

How is WIP Handled in an Accounting Practice Sale?

Last week, Ali the Accountant sent in a question, “When buying or selling a practice, can you please advise how you split up the work in progress (WIP)? I would presume it is done based on time spent and not billed before the sales and how much time is spent on the file after the sale can you please confirm?” My response: It is going to depend greatly on the timing of the sale, the amount of WIP, the nature of the WIP and the two parties in the transaction. For timing example, if t

Is it Possible to Buy Part of an Accounting Practice?

Last week, David the CPA sent me a great question that I thought would be relevant to the market at large. He asked, “Is it possible to buy part of a practice or must we be willing to purchase all of it?” My response: First, let’s separate the market between the single owner practices and the multiple partner practices. In the later, buy-ins occur particularly when the practice has a gross over $2 million and several partners of varying ages. It is not uncommon in a firm of t