This episode was originally published on September 25, 2020, but it’s a favorite among our Growing Your Firm Podcast community, so we’re bringing it back! Share your thoughts on social to tell us if you’ve been listening to the podcast since the original airing of this episode.
- Outline of the Acquisition Process
- Challenges that Come with a Lack of Talent
- Tips for Acquiring a Firm
Helpful Resources from Gretl
- Visit Lighthouse CPAs website
- Learn more about Jetpack Workflow, her workflow software
- Learn more about Live Oak Bank, the specialists helping with her acquisition
Meet Gretl Siler
Gretl Siler, owner and founder of Lighthouse CPAs, is a returning guest to the Growing Your Firm Podcast. In a previous episode, she discussed what it takes to buy an accounting firm.
Not distant from the process, Gretl has purchased 6 firms, including two of which she built up and then resold. The remaining four are now under the Lighthouse CPAs brand and she is currently in the process of integrating her most recent purchase into their business model.
Today, we will learn more about where Lighthouse CPAs is now, and continue the conversation from her first appearance for details about the acquisition process, the current lack of available talent, and hear some quick tips for acquiring a firm.
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Gretl says her first step in finding a firm for purchase is to head to the internet. She does a quick search which sometimes ends in working with a broker, but other times lets her work to get the deal done alone. Typically, the first thing Gretl looks for when analyzing a firm on the market is its business model. It is essential it closely matches hers otherwise the transition becomes too complicated.
From there she looks at their client base. Currently, Lighthouse CPAs is working with primarily business owners and less so 1040 clients, so the firms she looks to acquire are all working with similar types of clients. The firm she purchased in 2020 was the perfect fit in this aspect, and she even got it for a good price. Because of the economy, she believes she paid less than the market price for the firm.
Once Gretl has officially acquired a firm, the internal integration process begins. Depending on the firm, she will usually incorporate their employees into her staff, but is careful to find firms with employees who operate in a similar fashion.
She likes to make the transition as seamless as possible. Knowing there will likely be a few changes, she works to slowly incorporate them in so the employee can easily adjust. This also helps with the client-side of things as well. Again, she knows big changes right away can cause a rift between the client and Lighthouse, so she spends a lot of time building trust before suggesting significant changes.
A change in prices can often cause these issues, so to prevent it, she tries to acquire firms with similar prices, that way clients aren’t shocked by a jump in price.
As a side note, Gretl suggests consistently raising your firm’s prices by 2-3% each year. Your customers will learn to accept it, you’ll be keeping up with inflation, and you’ll be avoiding falling into a hole.
Challenges that Come with a Lack of Talent
While Gretl is seeing success through acquisitions, a recent problem she has run into is the lack of available talent to staff her firm. Job postings that would’ve gotten a dozen applicants within 3 days are going weeks without much interest, and when there is interest, the experience is lacking. But it’s not just her, through various online forums, she has found that many other accounting firms, and businesses, are struggling with finding quality candidates.
To combat this issue, she has started outsourcing some of her work. Typically, the outsourced company will handle the front-end things while someone in the office works more directly with the clients. Gretl has also been looking to hire remote workers. This opens the talent pool and appeals to more people.
David’s input: A lot of firms are going to have to start weighing their options when it comes to remote work. The current talent pool may require a remote work option or at least a form of hybrid work.
Gretl credits Jetpack Workflow for the ease of transition and workflow systems. She recommends firms use a tool like this. Thanks for the shout out Gretl!
Quick Tips for Acquiring a Firm
Gretl left us with a few quick tips for anyone interested in acquiring a firm:
- Once you’ve made the purchase, give yourself plenty of time to build trusted relationships with your new clients before focusing on buying another firm.
- A transition is very unpredictable. You never know how your clients or new employees will react to the adjustments so expect the unexpected.
Financing to buy a firm can be complicated. Make sure you use a financial partner who is a specialist in SBA loans and have a good process. This makes everything go much more smoothly. Gretl suggests Live Oak Bank as they have been a huge help to her.