You’ve Decided to Buy a Firm, Now What?
Here are some tips to ensure the practice you purchase does not disappear before your very eyes!Risk Number One:Employees While client retention is overrated as a risk factor, employee risk can be a real concern. Something you should do before thinking about going to see a single client is to meet with and take care of your new employees. They are going to want reassurance about their jobs and future and will look to you to provide it. You also have to be concerned about them becoming your competition.
There are ways to minimize this risk. One way to determine the intentions of a key employee is to require the employee to sign a no solicitation agreement prior to closing on the sale of the business. This protects you in most states from having one or more team members leave and start soliciting your clients. If that key person refuses, it could be a sign of intentions and things to come.
Risk Number Two: Do They Have One Major Client?
I met with a CPA many years ago who was interested in our marketing services. When I ask him what prompted him to contact us he stated “I’m losing one of my biggest clients.” Further questions unveiled that this one client represented 50% of his current practice. When buying, always look at how many large clients make up a firm as this could be a huge problem if one or two decide they don’t like the way you part your hair and leave after the sale.
Risk Number Three: Not Taking the Bull by the Horns
Just because you paid someone for their client list does not ensure those clients are going to stay. You must be proactive in reaching out to your new clients and have in place a transition that includes the seller introducing you.
There should be no assumption made that the clients are yours until you have sold yourself and your willingness and ability to serve their needs. This takes a huge effort by the buyer to make contact with all clients of the acquired practice as soon after closing as possible. The other important point is to make as few changes as possible. People generally do not like change and a sure way to have clients heading for the door is to change fees, personnel, location etc. Here at NCI, we advise our buyers not to make any changes for at least the first 6 months. This gives clients time to get to know and trust you which is paramount in any client/accountant relationship.
Bruce J. Clark, CEO Author, NCI Effect, Explosive Client Growth Plan for Accountants and CPAs www.ncieffect.com