12th September, 2024
In the latest episode of the Fiscal Therapy podcast, host Jody Sitters, MYOB’s Community Manager for Accounting Partners, dives into the world of mergers and acquisitions (M&A) with expert Kev Ryan.
Having shifted from tax accounting in the late 1990s to founding fee funding businesses and, later, specialising in transaction advisory, Kev brings a wealth of knowledge about the intricacies of accounting firm mergers.
His insights offer valuable lessons for any firm considering a merger or sale. Here’s a recap of the key takeaways from the conversation.
Kev has worked with countless accounting firms that are navigating the world of mergers. One of the main reasons practice owners approach Kev for advice is the increasing pressures of running a business solo.
From mental health concerns to burnout, more sole practitioners are finding that running an accounting firm alone is no longer sustainable. The demands of clients, coupled with staffing shortages and the rapid development of technology like AI, have made it difficult for sole practitioners to keep up.
Kev highlights that many practice owners are not necessarily motivated by financial gain but rather by the desire for support. They’re looking for a partnership that alleviates the pressure of being a sole operator. This is where mergers can be highly beneficial.
As Kev says, “Being a sole practitioner is not a fun place anymore.” Merging with another firm often brings the resources and support needed to continue delivering value to clients while maintaining personal well-being.
There’s no one-size-fits-all when it comes to mergers in the accounting industry. According to Kev, there are typically three types of mergers:
Each merger is unique and depends on the specific needs and goals of the firms involved. But one thing remains constant: a successful merger must be built on trust and a shared vision.
Merging two firms isn’t without its challenges, but there are ways to make the process smoother for both parties. Kev stresses the importance of willingness and alignment. For a merger to work, both parties must be genuinely interested in collaborating and open to change.
One of the most critical aspects of a smooth transition is ensuring that both firms have compatible technology.
“Plug and play is a big piece of making these things easier,” Kev explains. Aligning software systems, particularly when both firms use the same tech stack like MYOB, can make the integration process far less complicated.
Kev advises against wholesale changes to systems and workflows, especially during the early stages of the merger. Keeping the transition as seamless as possible helps reduce disruption for both the team and the clients.
Kev also emphasises that it’s important to take the time to get to know your potential partner. “You’ve got to be wanting to do it,” he says. Building a relationship of trust, understanding each other’s values, and being patient are key to making a merger successful.
Before you even start considering a merger or sale, there are several things you can do to get your practice ready.
One of the most common issues Kev encounters is repricing. Smaller firms often undercharge for their services, which can be a red flag for larger firms considering a merger. Kev advises firms to take a hard look at their pricing structures and ensure they’re charging what their services are worth.
Another important step is to clean up your work-in-progress and debtors. Ensuring that your financials are in order and that you have solid engagements with clients will make your practice more attractive to potential partners.
Kev also points out that it’s crucial to make sure you own the goodwill of your business. In many smaller firms, long-standing staff members may hold the key relationships with clients. Ensuring that those relationships are tied to the firm and not to individual employees will make your practice more valuable during a merger or sale.
For Kev, success in a merger is about creating sustainable outcomes. He emphasises the importance of not rushing the process and ensuring that both parties are happy with the arrangement.
One example Kev shares is a client who initially planned to stay on with their acquirer for six months but ended up remaining with the firm for over seven years. This type of long-term success is what Kev aims for in every transaction.
“It’s about sustainable outcomes,” Kev says. “Success isn’t just about closing the deal — it’s about making sure that both firms are still thriving years down the road.”
Mergers can be a powerful tool for accounting firms looking to grow, expand their capabilities, or simply lighten the load.
By finding the right partner, aligning values, and preparing your practice for the transition, a merger can open up new opportunities and provide much-needed support.
As Kev highlights throughout this episode of Fiscal Therapy, when done right, mergers are about more than just business — they’re about creating a better future for everyone involved.
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