Are you Looking to Sell your Tax Firm and/or Retire?

Nearly two-thirds of CPAs are over the age of 57, which equates to a lot of CPAs seeking to retire within the near future and many of their accounting firms becoming available for purchase. Due to an increasing supply of tax/accounting firms becoming available for purchase , the valuation of these firms has subsequently decreased. Unfortunately, 78% of business owners expect to fund their retirement through the sale of their business. 

You've worked your entire life to build your book of business only to have to sell your business at much less than it is truly worth due to unfavorable market conditions due to the influx of tax/accounting firms becoming available for sale. Much of the firms available for sale are listed at 125% - 150% of annual revenues; assuming 60% profit margins the money you receive for the sale of your business will fund approximately two years of your retirement assuming you maintain the same lifestyle during retirement. 

 Let's Paint a Picture with an Example

Ms. Agi has owned her tax firm for 25 years and has built a respectable book of business generating $175,000/year in gross revenue and providing for a comfortable lifestyle with remaining profits of approximately $105,000/year. After many years of hard work and missing numerous ski seasons due to the busy tax season, Ms. Agi has decided to retire and sell her business, 1040 Tax Firm, in hopes of getting to ski, travel, and enjoy retirement.

She contacts a business broker to list her business for sale and learns that there are 15 tax firms for sale all within a couple hours of her location and proceeds to have her business listed for sale at 137% of gross revenues at $239,750. After learning that there are many firms listed for sale in her region she grows concerned that there is not enough demand to meet supply, not to mention whether banks will lend to that available demand, and worries that she might have to work another tax season.

She remains hopeful that her business will sell before the end of the year and begins researching the cost of her new hobbies and retirement, eventually realizing that selling her business for $239,750 will provide for a little more than two years of income if she were to maintain her existing lifestyle. Fortunately, she will eventually have social security and retirement savings to leverage but she remains disappointed that her life's work will eventually be exhausted in such a short time. If only there was another solution... THERE IS.

An Alternative Option to Selling your Tax Firm

Cornbelt Financial has developed a platform providing an alternative option for those tax and accounting professionals seeking to sell their tax firms. Cornbelt Financial has leveraged economies of scale to maintain a nearly fixed overhead business model thus allowing us to reinvest our margins in human capital and expand our service level to provide additional value to our clients.

What this means for Ms. Agi? Rather than selling her book of business, she has contracted with Cornbelt Financial to service her clients therefore ultimately "renting" her book of business. As a result, Ms. Agi will experience the following benefits:

• retains ownership of her business,
• earns a generous recurring revenue share with Cornbelt Financial that lasts much longer than the funds would have from the sale of her business,
• has implemented a buy-sell agreement allowing for an eventual sale of her business that will greatly benefit her heirs, 
• and will confidently retire knowing that she will have a recurring revenue stream.