Art of Accounting: Advising a client to sell or buy a business

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There are no undergraduate and very few graduate courses on advising clients that want to sell their business or who want to buy a business. When I started my career, there were no CPE courses either.

I am trying to remember how I learned about mergers and acquisitions, and it seems that it was by doing the grunt work after the transactions were completed, watching my bosses in action, or when a boss explained what he was doing for a client I worked on.

Writing these columns in some manner forces me to travel back to the recesses of my mind to recall how I learned something so that, perhaps, I could write about it so some readers could benefit from some of my experiences.

I remember the first M&A “lesson” a boss gave me. Bernard D. Kleinman sat down with me to explain how he was advising one of his clients on buying a business with no money. He called it a bootstrap acquisition. Later on, some hotshot investment banker started calling these transactions leveraged buyouts. Basically it involves buying a business by using the assets of the business as collateral for a loan the buyer gets to use to buy the business. Actually it’s no different than a home mortgage where a minimal amount is put down and the bank provides the funds for the balance of the house.

Anyway, what Bernie told me was a two-fold eye-opener. The first was what I learned and the second was how to be a great boss. I always think of Bernie when I instruct younger staff, hoping I am “paying” him back by the way I am “paying it forward.”

To continue paying it forward I will be presenting two FREE M&A webinars on Sept. 8 and 17. You can register easily at www.withum.CPAacademy.org. They are:

Sept. 8 at 10 a.m. ET: 48 steps to advising a client on selling a business;

Sept. 17 at 10 a.m. ET: 60 steps to advising a client on buying a business.

If you cannot attend, I’ll send you the two PowerPoint decks. Email me after Sept. 17 at GoodiesFromEd@withum.com. Just type “M&A” as the subject. No need for any message.

Do not hesitate to contact me at emendlowitz@withum.com with your practice management questions or about engagements you might not be able to perform.

Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People list. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. Ed is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 743-4582 or emendlowitz@withum.com.