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Case Study:

Helping an Accounting Firm Achieve a Profitable Exit

Background Information

  • Business: A family-owned accounting firm operating for 20 years.
  • Location: Midwest, USA.
  • Revenue: $4.5M annually with an EBITDA of $600,000.
  • Team: 10 full-time employees, including an operations manager and senior accountants.
  • Owner’s Goal: The 55-year-old owner wanted to retire within a year but struggled to position the firm for a profitable exit.

Current Challenge

  • Stagnant Growth: The firm had plateaued in revenue over the past three years.
  • Underutilized Technology: Outdated processes and software created inefficiencies, leading to missed opportunities for profitability.
  • Limited Buyer Interest: Initial outreach to brokers yielded low offers, well below the owner’s expectations of $5M.
  • Owner Dependence: The owner was deeply involved in day-to-day operations, making the business less appealing to potential buyers.

Our Solutions

  1. Operational Optimization:
    – Streamlined workflows by implementing advanced accounting software and automating repetitive tasks.
    – Reduced overhead by 15% through the use of cloud-based tools and renegotiating vendor contracts.
    – Delegated routine decision-making to the operations manager, reducing owner dependence.
  2. Profitability Enhancement:
    – Identified and eliminated low-margin services, focusing on high-value offerings like tax strategy consulting and business advisory services.
    – Raised prices on underpriced services, increasing EBITDA by 25%.
  3. Market Positioning:
    – Rebranded the firm to emphasize its expertise in serving high-growth small businesses and professionals.
    – Crafted a compelling buyer prospectus showcasing consistent revenue, a strong client retention rate, and growth potential in niche markets.
  4. Buyer Targeting:
    – Identified strategic buyers, including larger accounting firms and private equity groups, that valued the firm’s established client base and operational efficiencies.
    – Highlighted the firm’s scalable model and transition plan to attract premium offers.
  5. Owner Transition Plan:
    – Developed a 12-month transition plan, allowing the owner to gradually step back while ensuring continuity for clients and employees.
    – Positioned the operations manager as the face of the business, instilling confidence in potential buyers.

Conclusion

With these strategies, the accounting firm achieved remarkable results:

  • Sale Price: Sold for $6.5M within 10 months—30% above initial broker estimates.
  • Buyer: A regional accounting firm seeking to expand its market presence.
  • Owner’s Outcome: The owner transitioned out of the business with peace of mind, enjoying a well-earned retirement while ensuring the legacy of the firm was preserved.

This case highlights how strategic enhancements and positioning can transform a business into a high-value acquisition, delivering exceptional outcomes for owners ready to exit.

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