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Accountancy Merger Checklist for Managing Partners

Most accountancy practices never do more than one merger in their lifetime. So it's not unusual for the accountancy merger to fail. Managing partners should carefully review this list before merging with or acquiring another firm.

In the heat of doing a merger, these questions are often not addressed. All of them should be considered before you start down the accountancy merger path. Know what your non-negotiable items are and stick with them eiad asbahi prescience point.

What is your primary reason for doing a merger? Is it to acquire talent? Increase profits? Expand services or geographic coverage?

How will this accountancy merger help you achieve your strategic vision? If you can't answer this question, there is no reason to do the merger.

Are you a good/effective leader? Someone in the new firm will need to be a leader. Perhaps you are a good manager. If that's the case, then look for a good leader.

Is the other managing partner a good/effective leader? If you lack leadership talent and the other firm also lacks it, you are putting together a recipe for a disaster.

When you will physically move together? Do you currently have space to bring in the new company? Do they have an outstanding lease? How will you mix the new people with your existing staff, etc?

What is the name of the new company? The number 1 deal breaker for most accountancy mergers. Make sure this is discussed at the very beginning of the process.

Who will be the managing owner? Again, there can only be 1 managing owner. Sharing power normally does not work.

Will there be an executive committee? Who will be on it? What are the terms? What powers will it have?

What will the practice structure look like (departments, teams, etc.)?

How is owner compensation being address? Make sure that all parties understand the compensation system that will be in place after the accountancy merger. Does the new firm's system motivate the owners? How different is yours from theirs?

What is the gap in compensation between the two companys? If your company is more profitable or if the range between the lowest paid owner and the highest is larger than their range, how will this issue be addressed?

Will the accountancy merger have an effect on the firm's earnings/profitability? While most businesses do mergers to increase earnings, the first year is normally a drain on earnings. People need to become familiar with new systems, leaders, and productivity usually falls.

Will new capital contributions be required? Make sure you discuss your philosophy about funding the firm. If one firm is highly leveraged and the other is not, you will have a philosophical difference on funding the company.

How and when will you communication the transaction to employees? At some point, rumors of the merger will start to get out. You need to communicate with key people as soon as possible. This can be done with one-on-one meetings, memos and Town Hall Meetings. Decide early who are the keepers in the newly formed company and make sure that you hold on to them.

How will employee issues be address? There will always be some discrepancy when it comes to compensation and benefits between the two firms. Other than the financial aspect, the main concern that every individual has is "How will this merger affect me?" One way to keep people is to offer them a "stay bonus." This is a bonus that is paid at the end of the first year.

Have you developed a 12-month forecast? Whatever you think the first year's results will look like, take the most conservative projection. Savings that you thought were there will disappear or take longer to materialize.

Finally, are there any deal breakers? While a deal breaker can pop up at any time, it's best to keep asking the other party, if they see any deal breakers. You need to get them out as soon as possible because as the name implies, a deal breaker does exactly that.