The Culture Test: Three ways to ensure cultural fit when selling your small public accounting firm

  • June 7, 2024
  • Mark Hughes CPA CFE

It’s no secret: accounting firms in Southeast Michigan are eyeing each other with interest lately. Mergers between firms in our industry have been on a ten-year tear, with no abatement in sight.

If you’re considering the sale of your business as a means to retirement, succession planning, or for strategic reasons, it’s important to consider the number one factor that can cause otherwise great firms to fail post-merger: cultural shock. Cultural fit when merging two CPA firms is critical but difficult to assess before the teams actually start working together.  Going into a potential sale, you should examine carefully the acquiring firm and how well your staff and clients will fit in their new home.  Here are three elements that should be aligned to ensure a cultural fit:

1.     Policies & procedures.  You can learn a lot about a firm by examining its written policies on things like employee dress code, billable hours required, client billing procedures and owner vs. staff compensation.  If your staff is used to a relaxed or remote atmosphere, the transition to a more formal office environment may be traumatic and result in a loss of staff (and clients).

2.     Client and staff demographics.  Firms that specialize in one industry or service area may have trouble accommodating your clients if they come with drastically different needs.  In order to retain your firm’s clients post-merger, make sure the acquiring firm has staff and capabilities that suit your clients’ needs.

3.     Partner mentality.  Does the acquiring firm manage clients through a team approach, or with a partner-take-all sense of ownership of individual clients?  If your firm takes a shared responsibility for all clients and the acquiring firm encourages partner-loyal clients, your migrating clients may feel lost in the shuffle and leave quickly.

Finding a merger partner is easy—finding the right merger partner whose culture and clients fit well with yours is harder, but it’s hard work that will pay off.  By dedicating time to your firm’s merger now, you’ll secure the success of the sale and guarantee continuity for your clients and staff in the years ahead.

In need of a transition plan?
A mid-size CPA firm with the technology, highly-trained staff and next generation of leadership already in place, Metro Detroit-based ShindelRock seeks to acquire public accounting firms with a team of five to fifteen, located in Oakland, Wayne or Livingston Counties.  Our best fit will be with firms who desire to transition their practice over time, allowing their principals to eliminate their administrative burden as they ease toward retirement.  We can offer maximum value, continuity for clients, and a culture of genuine support for each team member’s growth and individual goals. 

For more information, please contact Mark Hughes at 248-855-8833 or [email protected].