Will I Sell my Firm to Private Equity?

Hey 👋 - Brandon here.

Happy Saturday to 1,430 growth-minded accountants.

Here’s one growth tip for you and your firm.

Today’s issue takes less than 7 minutes to read.

Over the past year I’ve had the benefit of connecting with private equity searchers who are looking to acquire CPA firms.

These folks have large purses backed by institutional investors and it has been fascinating learning about their world and acquisition criteria.

This may be a controversial opinion, but I think PE will ultimately be good for the industry for two reasons:

1. Competing with PE-backed firms means overhauling how we go to market and service clients to keep up

2. Firms will want to make themselves attractive to PE and will make necessary tweaks to their business models to boost valuations

Here are they key reasons PE searchers want to buy my firm:

Marketing Dominance

We generate 400+ webform submissions per month.

This is thanks to ~4M podcast downloads, 30k website hits per month, a FaceBook group with 17k members, hundreds of thousands of LinkedIn impressions, 17k+ YouTube Subs, and 22k landlords on a weekly tax newsletter.

(And more recently my 3.3M impressions on Twitter).

Every minute of spare time I have, I invest in “filling the pipeline” (that goes for sales and talent).

An endless stream of qualified leads means we gain pricing, scoping, and capacity planning power.

And we continue to find success even when I’m not the “face” of the content.

Systematic Sales Process

Our services are productized so non-accountants can understand and sell them.

The two main leverage points I gain with this approach:

• I can hire great salespeople, even if they aren’t accountants, which expands my hiring pool

• My people don’t have their days disrupted with sales calls and issuing proposals

PE finds this attractive because they can plug literally anyone into my sales system and find success.

They don’t have to be accountants.

Data-Driven Capacity Planning

One of the best things we ever did was implement revenue-based production expectations for our staff.

And when we coupled that with systematic upfront pricing of all projects, we are able to predict capacity needs months in advance.

This made the 2023 tax season relatively smooth.

For example, we predicted back in August 2023 that our 2024 tax compliance revenue would run roughly $4.1M.

And because we know exactly what we can expect per associate, senior, and manager in terms of revenue production, we were able to build a hiring plan and execute it this fall.

This enabled us to proactively onboard 8 U.S. hires and 20 offshore hires and this team should fulfill our hiring needs until December of this year.

Partners Don’t Do Client Work

I want my partners to work ON the business.

To do that, they need to create space, both physically and mentally.

And to do that, they need to shed most client work.

This year, two of the six of our partners have client work and responsibilities. Next year, I hope that number will be zero.

To be clear, this is certainly a more costly approach to scaling business.

If my partners did the client work, we’d get to brag about how high our margins are (since partner pay doesn’t hit the P&L… 100% margin projects baby!).

But I want to hit $100M in revenue as fast as I possibly can, and the only way to to do that is by investing in smart people to build the teams and systems our firm needs to scale.

My Pizza Making Skillz

Interestingly, every PE shop offered me $1M for my pizza recipe alone.

But I think it’s worth more than that…

Will I Sell?

Nah.

But I might be looking to buy soon.

If you know of any niche firms around the $3M revenue mark where the owners are burned out and looking for help scaling up…

Shoot me an email.

That's all for this Saturday. See you next week.

Whenever you're ready, here's how I can help you.

→ Work with me 1:1 to grow your firm (now accepting waitlist coaching applications)

See you again next week.

Cheers,

Brandon

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