TFYW#054: Buy Vs. Build – Plans To Grow

Sep 22, 2023

This week, I want to explore a topic that will cross most firm owners’ minds when considering growth strategies.

Selling My Firm

I knew I wanted to sell my firm at the end of 2020. I planned to finish one more tax season and then list my firm.

I contacted an advisor, Poe Group Advisors, to help me with the process, and listed my firm in May 2021.

There was an incredible amount of interest in my virtual firm. Over 75 firms from all over the continent requested to view my firm profile.

I met with 28 firms, and every one of them wanted to use my firm to either start or grow their online clientele.

After two months of meeting with prospects, I shortlisted 4 of them.

One of the buyers was willing to pay full price with a premium if they could retain me for a transition period.

I went with that buyer, and the deal closed on September 29, 2021. I spent the following eight months integrating systems, training team members, and transitioning clients for the new firm.

Being involved with the firm transition at the ground level was eyeopening. There are so many moving parts when a firm absorbs another one.

With many firms being sold in the foreseeable future, buying one can be a great opportunity if you understand and prepare for it.

Buy Vs. Build

The prompt for this week’s newsletter comes from a reader who asked about my take on buying versus building a firm.

The question came from a new firm owner, so my comments will be most pertinent for solo or smaller firms that are looking to acquire a firm.

Transparently, my experience in directly selling a firm is limited to my own.

I have no direct experience in buying a firm, but I have spoken to several selling advisors and dozens of firm owners who have recently purchased firms or books of business.

Candidly, I lean towards the building approach for growing your firm. I am in the camp that a firm should be a vehicle for wealth creation, not at the expense of your life or health.

And to achieve a certain goal, you must have as much control as possible over the variables that play into the outcome.

When you build, you make every decision about your clients, team members, systems and culture.

When you buy, you inherit all of those things from someone else. That doesn’t mean you can’t change them, but the process and stresses will look different.

Buy A Firm


+ Instant revenue – This is the best variable. Profitability may be questionable, but at least revenue will flow from day one.

+ Certain traditional firms are losing value as cloud firms increase in the market. This opens up opportunities for acquiring firms for less than common historical valuations.

+ There are good financing options available for accounting firm acquisitions. You may not be able to finance the whole deal, but accounting firms are safe investments for banks.


There will be client or employee churn when you make changes to processes or prices. 100% of the purchased revenue won’t be retained in the first year.

The systems, team members and clients have all been set up and managed by someone else. The first 6 to 12 months following the acquisition will be spent building systems and resetting habits and expectations.

Unless you purchase a niche firm, you will instantly become ageneralist firm. You will fight against the current of commoditization.

Build A Firm


+ You can be very intentional with how your firm is built, from the clients you work with to the services you offer. Burnout is less likely when you are controlling the speed and direction.

+ There is increased agility with the systems and processes you adopt. Switching tech solutions is less painful as you have time to figure out what works as you evolve.

+ Time to learn new skills. Building a firm takes a different skill set than working in a firm. Selling, managing and strategizing become more important than service delivery. Building a firm lets you evolve as your firm does.


It can be stressful. Plain and simple. When cash is tight, it’shard. I’ve been there.

It takes time. You can purchase a firm that would take years tobuild otherwise.

Deciding on systems, niches, or prices can be overwhelming.For any firm, systems, offerings and prices should evolve over time, but starting from scratch with no previous experience feels like drinking from a fire hose.

Acquisition Considerations

Regardless of the firm you’re purchasing, there will be misalignments in three main areas happens:

  1. Clients
  2. Team members
  3. Systems

So, if you decide to buy, reducing the impact of the misalignments has to be priority one.

There is a knock-on effect with these misalignments.

If some clients are not the right fit, you can lose some of them with the lowest impact – yes, you’ll lose revenue, but clients are replaceable.

However, if there is a misalignment with team members and they leave, clients may go with them, or there might be a drop in your quality of service, making your clients leave on their own. I have seen firms battle their new employees as they try to make improvements.

Finally, if your systems are completely misaligned, the disruption to improve the systems will have a negative impact on both your team and clients.

I have seen firms that, after an acquisition, are running multiple locations on different systems. The task of staying on top of the teams and client needs is nearly impossible.

The biggest systems misalignment is a cloud firm buying a brickand-mortar one. Unfortunately, this is currently one of the most common buy/sell arrangement.

I’ve chatted with cloud firm owners who tried it and they have openly acknowledged that the transition failed. I am not saying it can’t be done, but relocating, at least temporarily, close to the brick-andmortar firm has to be part of the plan.

Final Consideration

In my opinion, the most important considerations of an acquisition is your capacity and the capacity of the owner selling their firm.

The less capacity you have, the less time you can spend integrating the firms.

The less capacity the selling firm owner has, the more work to be absorbed by you and your team.


If you don’t remember anything else from this week’s newsletter, remember this:


If there are two similar firms with the same gross billings, the one with the lower-billing firm owner is more valuable in an acquisition.


The success and ease of an acquisition are less about the revenue you purchase and more about the system that generates that revenue.

Have a good week!

Build The Firm You Want.


P.S. Email with something that you want me to talk about. I’ll add it to the list. 

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