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It Takes Two: Making the Transition Work

  • Published on Aug 9, 2021
  • by Wade Holmes

Guarantees are great, but when it comes to buying a business, they’re quite rare. When a new franchisee purchases a McDonald’s franchise, they don’t have the luxury of getting a guarantee that cars will line up for hamburgers the next day. Risk is inherent in business acquisitions. So, the real question is: What is the best way to manage the associated risks?

Correctly answering this question makes all the difference. The buyer recognizes the success of the present owner and has confidence they can achieve the same or better results in their new role as the owner. Of course, past performance is not indicative of future results. Working together, the buyer and seller can achieve a successful transition by following these four guidelines:

1. Meet Clients’ Needs

A good name (aka, goodwill) is certainly important to client retention, but that’s just the start. The seller is a trusted advisor, so clients should place a high degree of confidence in who they select as their successor. If the buyer provides at least the same level and type of services to the clients, retention will be high. But retention is not impacted simply due to a change, but a change in the wrong direction. Make sure that meeting clients’ needs is the primary focus and deliver excellent results, and they will stay.

2. Practice Patience

Very few people love change; the unknown can create anxiety. Assuming the seller is average at what they do, some clients will be disappointed when learning of the shift in ownership. Depending on the age of the seller, many clients may have anticipated it. Some clients may complain to the seller, but most will adapt as they interface with the new owner. We recommend limiting the number of additional changes that directly follow a closed deal. Retaining the location, the client processes, rates, staff, etc., will be very helpful in the transition. This is not a hard and fast rule. If amending any of these variables leads to a measurable improvement and improves the client experience, it could be the right move. Patience will pay off!

3. Provide Stellar Service

A buyer once asked us how he could best retain clients. Our answer was simple: “The same way any business keeps customers — treat them right and provide solutions to their problems.” Clients don’t pay the present owner out of charity; they choose the practice and practitioner because they are confident their needs will be met. Clients also want assurance that the professional has their best interests in mind. Studies have consistently shown the primary reason clients leave any professional is because they did not receive the level of service promised and felt unimportant. So it’s on the buyer to build relationships, earn their trust, and deliver on any promises. The clients will not only stay, but they will also refer their family and friends. The daunting idea of searching for a new professional, moving years of data over, and hoping they found the right one is much more stressful.

4. Collaborate and Support

It takes both parties working together to make a successful transition. Consistent messaging is crucial. When notifying clients, emphasize the benefits of the change to the clients. Be clear as to what is actually happening. For example, if you are not merging practices, don’t announce a merger. Be honest and transparent; they will appreciate this approach. Without fail, the number one concern we hear from sellers is that their clients won’t be well cared for. Sellers should plan to be available behind the scenes, and be sure to let clients know. This allows the buyer to start building relationships and puts clients at ease knowing that the seller is helping ensure a smooth and seamless transition. In some cases, clients may express frustration regarding the new owner. The seller should use every opportunity to speak highly of the buyer and assure the clients that they will be well taken care of. Sellers have an ethical responsibility to the clients and to the buyer.

We encourage you to revisit and apply these tips throughout the transition process to ensure a successful change of ownership. Again, each deal is unique. If the buyer is competent and treats the clients right, and the seller is positive and supports the buyer, then there is every reason to believe that the shift will be positive for everyone.

Originally published in the TXCPA Houston's Online Magazine called the Forum. Read the full magazine here

Wade Holmes is an independent agent of Accounting Practice Sales and is an accounting and tax practice acquisition specialist in the Houston and Southeast Texas market. He has around 15 years of experience assisting both buyers and sellers in successfully transitioning practices. Accounting Practice Sales is the largest marketer of accounting and tax practices for sale in North America. As a broker with Accounting Practice Sales, Wade has successfully negotiated hundreds of deals while also assisting buyers and sellers with the details involved in getting a loan to secure the sale. Wade resides in the Houston area, and he and his team are available to help answer questions regarding the buying or selling of a CPA practice. Additional helpful articles can be viewed on the Accounting Practice Sales website