Now that tax season is over, you may be thinking of growing your practice through an acquisition.While it certainly remains a buyer's market, smart buyers make sure that they have worked through the following points.

1. Understand why you want to acquire a firm. If it does not fit your strategic plan, you need to step back and revisit your objectives. Ask yourself how the acquisition will strengthen your core competencies. Most acquisitions that take a firm in a new direction fail to produce the desired economic results. If you cannot articulate how the transaction will make the firm economically better, it might be better to walk away.

2. Do you really know the seller? Don't tell me you looked in the seller's eyes and decided that this was going to be a match made in heaven. My experience is that a transaction takes a good nine months from start to finish. That gives you sufficient time to see if there is good chemistry, a common set of business and ethical beliefs, and most of all to see how the individuals act during the entire negotiation process.

3. Put your best person in charge. Acquisitions often start with a dinner between two managing partners. As the buyer, you want to have representing your firm the partner who can best deal with legal and financial detail, who does not get emotional, and who has time to dedicate to the lengthy process. This may or may not be the managing partner.

4. Don't let emotions rule. Smart buyers identify all the deal-breakers up front. They know when to walk away from a transaction, because they have done their due diligence on the market, the prospects and the price they are willing to pay. Smart buyers know when to walk away from a transaction.

5. Think about integration issues up front. I have often said that it is not the acquisition itself that's hard, it's the integration. This is when deals begin to unravel. My experience with acquisition is that the real work begins with the integration.

No matter what you call the transaction, one firm, one culture, will be the dominant one. Determine what that culture will be, what processes will be used and what systems will remain before you sign the contracts.

6. Identify "keepers" up front. Accounting mergers are all about the people and client relationships. Make sure that you identify the "keepers" up front, and let them know that they are important to the future of the firm. The No. 1 thing going through everyone's mind during a merger is, "What will happen to me?" You need to answer that question for the key people.

7. Develop a letter of intent. Developing a good letter of intent is critical for future negotiations. The letter should outline the key financial and non-financial terms of the transaction. Your letter of intent should be non-binding. In other words, you and the seller have the right to terminate the transaction at any time without any penalties to either partner. The letter of intent should have a provision that binds the seller not to use your offer to shop around for a better deal.

8. Does the firm have previous acquisition experience? Experience has proven that first-time acquirers make financial and operational mistakes. It's like anything - we learn by doing. This leads to the next point.

9. Decide whether to hire a consultant. Consultants can save you a lot of time searching for the right candidate, holding your hand and providing you with the necessary checklists. A good advisor will also make sure that the deal continues to flow, and help you maintain your sanity during the negotiation process.

The above list of items is by no means everything you need to think about. If you are considering an acquisition, especially for the very first time, don't try to do it yourself.

It usually turns out to be a costly venture.

August Aquila, Ph.D, is a consultant to the profession who has been involved in nearly 100 acquisitions. Reach him at (952) 930-1295 or at aaquila@aquilaadvisors.com. (c) August Aquila.

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