The Power of Tax Season for CPA Firm Sellers

The level of success of tax season can make or break the financial position of CPA firms and can be extremely influential on the terms and negotiations of a possible post-tax season merger or sale of a firm. Many firms will enter tax season knowing they want to get a deal done and others will emerge from tax season realizing that a deal is the right answer.

Whether you are currently deal-minded or not, putting tax season to your best advantage is a very smart business move. As you set the stage for this coming tax season, here are five steps that will bring benefits to a deal.

1. Optimize Client Relations. Acquirers want to know clients are committed and satisfied. Each firm partner/owner should reach out to their top 15 clients monthly. Keeping the best clients happy is always important but even more so when a deal is going to happen. Clients need to come into a deal feeling loved to embrace the deal.

   
   

2. Recalibrate Client ROI. Margins and profitability will be the first filter that acquirers will use; tailor your client service model so your results differentiate you in a positive way. Use busy season to skew engagements to the ones you handle most efficiently and profitably. Be disciplined about using minimum fees for all levels of services and be selective about what clients you will take even with minimum fees. Push the value-added buttons to produce the right ROI.

   
   

3. Add or Amp Up Outsourced Services. Most strong acquirers are managing staff shortages by using offshore resources. Acquirers will push offshoring so the more experienced you are with it, the better. If you have no offshore history then start with moving 10% of your compliance; if you have history, add 15% more to your offshore volume. Talk to firms who have had good experience and emulate quickly.

   
   

4. Inspire Your All-Stars. Successors want your top staff to stick around as much as you do. Have an incentive compensation system in place which is highly objective and quantifiable. Give your best people the runway to take care of who they believe are the “A“ clients. Work with your all-stars to maintain and grow billings while reducing the number of clients.

   
   

5. Be Metrics Savvy. In deal-making, data is the key that opens eyes and unlocks minds to the potential of a combination. Know what benchmarks you need to have at your fingertips and monitor your achievements vigorously.

Signs point to another active year for M&A in 2026. The key to sellers winning at M&A will come from their advantages. Tax season brings all kinds of opportunity to get the upper hand.