Merge or not to merge?-Guidance required.

Merge or not to merge?-Guidance required.

Didn't find your answer?

I am a 40 year old ACCA sole practitioner with GRF of £130k. Have offices and 1.5 full time staff. Over the years I have seen the increase in bureaucracy and red tape and am now finding it increasingly more and more stressful to service my clients. With so may regulations, new rules act to follow, It is difficult to be 'Jack of all trades' and I am now starting not to enjoy it and finding it very stressful and getting depressed. I don't want my standards to drop and want to continue to give clients and good service and at the same time have a life! I am posting this message on Sunday PM!

I have been considering a merger for while and out of the blue, I now have an opportunity to merge with an ACA sole practitioner (I met a few years ago) who is 2.5 times bigger than me and has a more structured set up with 4 full time staff. I am now thinking about it and need to list the issues I need to consider. I don't want to rush into it for the wrong reasons.

Whilst I have a list of issues I think are relevant, I have no experience of accountancy practice mergers and do not have close contact with whom I can discuss this with. I would be very grateful if others who have been through this process could kindly guide me with the issues and points that I should be look into. Those of you who have merged, do you recommend it? Any pitfalls to avoid? Do you regret it?

OR can a sole practitioner set up a stress free structure and enjoy the work?

I am sure this subject must have cropped up before on these pages but can not find a link. One disadvantage is that I will loose my independence which I accept is a small price to pay to be able to have a stress free working environment??

Anon

Replies (6)

Please login or register to join the discussion.

avatar
By AnonymousUser
20th Jun 2005 13:58

Grass is always greener
Don't be mislead into thinking that you can have a stress free life just by merging.
My experience is that although you no longer have to worry about things on your own, you still have to deal with them. The big benefit is that you can share views with your partner, but you will also take on other worries and concerns as you become part of a bigger organisation.
Important issues for me were:
1. Standards of other firm must be as high as yours. Ask to see some files and check on systems/checklists/procedures in place. Your professional future could be jeopardised if your new partner is not up to scratch.
2. As size increases, so do costs and there is a distinct liklihood of an upward pressure on your fees. How will your clients react?
3. Allied to 2. above, how do the hourly charge-out rates compare between the two firms? Too far apart and you may have problems.
4. A partnership agreement must be in place to protect you whatever the circumstances. Make sure it covers agreement on profit share, drawings, payment of tax, retirement, death and partners leaving or falling out (to start with).
5. In my opinion, mergers of two firms where they operate largely like two firms under one roof, do not last or work. There are always too many conflicts, in all sorts of ways.
6. Try to ensure that you can have a proper merger with each of you accepting the responsibility for different parts of running the firm. Try also to share the workload of all clients on the basis of your individual technical strengths and not just on the basis of who the client used to belong to.
7. Be aware that your work and methods may be called into question by your partner. For someone who has been on his own, this can be hard to take.
8. Be prepared to change your methods to those of your partner, if his are better and also be sure that he will change his methods if required.
9. Equal partnerships, rarely are (due to personalities) and you may find yourself as the "junior" partner. Ask yourself how you would cope with such a situation.

The above are observations from personal experience and they worked for me.

I would say that I still have a lot of stress but I can at least try to share it with others and get support when required. I am also compensated by making more than I did on my own.

Thanks (0)
avatar
By JSJ54
20th Jun 2005 16:25

If you find the answer to
"Can a sole practitioner set up a stress free structure and enjoy the work?" please e-mail me at [email protected]

Good luck.

Thanks (0)
avatar
By User deleted
21st Jun 2005 11:08

Be realistic
I am in a very similar position to yourself and am also plagued by the same problems! However, I have worked for small partnerships in the past and I cannot help thinking that they have all the same issues with the additional partnership stresses.

Just beacuse you become a partner dosn't mean that you will not have to keep up with all the new legislation as before. It doesn't mean that you will not have to worry about reporting your clients to NCIS, it doesn't mean that you will not be plagued by the complexities and iritations of employing staff, it doesn't mean that you will not have to keep up to date and comply with all the new ethical guidlines. Sadly, these issues are simply part of being an accountant in this day and age.

I think it is fair to say that is impossible to be an accountant in the current climate without having doubts about ones ability to do the job properly.

You either need to become comfortable with the stress of being an accountant or look for another job!

Thanks (0)
avatar
By AnonymousUser
21st Jun 2005 14:08

Running away
I am in a similar position to yourself. Once the WORK is not as enjoyable you find everything else gets out of proportion. Running away (merging) is not the answer. As John quite rightly says you have to make your business more efficient to deal with government nonsense. If you don't want to get involved with it split your business into 2. One that deals with Accounts and Tax and the other that deals with bureaucracy. Although the two are inter-twinned it will leave you to ENJOY the real work once again. Now that TB has realised that bureaucracy has killed off the EU perhaps he might turn his attention to the UK.

Thanks (0)
By jeremykitchin
21st Jun 2005 14:17

If you merge, be sure you have the key to the door
Having served the accountancy profession for 33 years, specialising in mergers and acquisitions, I would add these cautionary points to the earlier comments:
1. In the knowledge that up to 50% of all professional partnerships end in divorce the would-be 'mergees' should incorporate in their partnership agreement a safety valve - a clear and unambiguous method of going their separate ways without acrimony and without bringing the firm to its knees.
a) Does one buy the other out, if so what value is to be placed on the goodwill? Or
b) Does each take an agreed portion of the client portfolio, perhaps the clients they brought into the partnership? If the latter, what happens to clients acquired since the merger?
c) What about staff? Who pays any ensuing redundancy costs?
d) What about partnership liabilities, overdraft, leases on software, office premises, etc?
2. What if one of the partners wishes retire, is taken ill, wants to reduce his working week, etc? Are these eventualities covered?
3. What happens if the partnership is approached with a view to being taken over and one says "yes" and the other "no"?
4. I would advise you to look at a number of firms before committing yourself to one - a sort of beauty parade. In particular, ask yourself whether you 'like' them. Once you have identified your preferred choice, carry out due diligence to understand what type of firm he runs.
5. Finally, you are likely to spend more time with your business partner than your wife; would you recommend marrying without a courtship? Get to know him.

Thanks (0)
avatar
By J R Atkin
21st Jun 2005 11:31

Don't merge - improve your own practice
Partnerships seldom work.

Why not take on a suitably qualified additional member of staff to share the work and responsibility, who could also be a future potential partner.

Almost invariably when you have extra capacity you find additional clients, or more work from existing clients, because you can offer a better service. The additional initial extra cost should soon be covered by the extra revenue.

Thanks (0)