Accounting Firm Acquisition ARBITRAGE Opportunities

The perfect accounting firm acquisition. It is so much more than the business you're buying. It is what you have to offer that business. The other stuff that you can layer in. So you're buying one type of work, but then layering in a bunch of other work that makes that purchase just massively profitable. For context, I've done acquisitions. In the last three years, I've talked with hundreds of firms, put together myself, quite a number of transitions and the acquirer is always coming in with a certain expectation and you know, certain like arbitrage opportunities that they see, some of which are more real than others. So today we are ranking 12 types of arbitrage opportunities. We're putting them on a tier list. Which ones are real, which ones are a mirage. And you might just come out of here with a few new ideas of how to turn what could be just a humdrum, regular old acquisition into something that is wildly profitable. Let's do it. On my newsletter last week I dropped a note, said if you're looking to buy a firm, hit reply. If you're looking to sell your firm, hit reply. The number of people that are in the market to buy an accounting firm right now, it is shocking. In fact, if you're thinking about selling, drop me an email. If you're not in my newsletter. What the heck man? Jasononfirms.com Newsletter all sorts of crazy stuff happening in there each week. Let's get into it. 12 types of accounting firm arbitrage. Arbitrage that can come from acquisitions. To be clear, we're not talking about birds here. We're talking about maybe non obvious ways that you can buy a client base and then like sell more work into that client base overnight to make that acquisition just a total no brainer. Okay, first type number one. I'm going to call this one general modernization. And this one sucks. I'm giving this one a C Bo but this is the most common one. You see it's a big brain. It's a big brain. Well educated folk, they're on the outside. They say accounting firms, those look lame and weak and they see how they do the work and they see like the tax software or something like that. Or they see Glenn with his pants hiked up halfway to his nipples and they say, oh we just buy this, we're going to make a heck of profitable just by changing out some tech. And let me tell you, there are a lot of a lot of broken dreams on that road. Did I say I'm giving this one a C? If I didn't I'm giving this one a C. There is some reality to it for sure. Yeah, get better tech in there. Everything is more productive. But that is hard because the tech doesn't do the work, the humans do the work. And upending decades of muscle memory that an accountant has doing something in one platform and then expecting them to jump straight over to the other platform gleefully and be equally, if not more productive in that other platform. Buddy, that's a hard thing to do. In fact, the most efficiency comes, I would say, not from changing the tech, but by the tech change driving people out and attracting new people in. It's not to say that people can't change. It just takes a long time. And the faster version of this is actually the turnover of the people. And changing tech will create turnover of people. And not that that's even necessarily a bad thing if those folks aren't aligned with the direction that you're trying to take the firm. But from PE platforms to little solo things. I mean, I shared the story on the podcast of a software developer who was done doing software stuff and he is like, I'm just gonna go buy an accounting firm, automate the heck out of it. Seems like it could be a cool business. He came in what he found. Workflow wasn't a whole lot of headway he could make on that stuff. A software developer, even the notion of building totally custom stuff. He decided there's not much of an opportunity and that the bigger opportunity came around sales and marketing automation. So. So he doubled the size of that firm through sales and marketing. Didn't even touch the workflow. So is it real to a degree, the notion that you can modernize a firm and make more money? Yes. But like, if you're looking for the fast path to a really cool firm, it is not going out and buying, say, a legacy tax firm with a retiring partner where they're doing everything on paper. You certainly can. And to be clear, those firms make really good money. But what we're looking for is arbitrage opportunities. If that single owner tax firm was running 60% margins with a legacy owner that was very involved in managing clients, that's not a $600,000 a year business because you got to hire somebody to come in and fill the seat, you're going to lose a lot of those relationships because a lot of them will be the old farts that have been with that partner forever. And then modernizing that firm, it is generally a bigger task than we, than we expect it to be. So general modernization of tech. I'M going to give that one a C. Next, replacing the owner as an operator, a lot of folks are just doing roll ups, pushing out the retiring partner, saying, oh, we'll just do more of a pooled approach. The staff that will do the work are ultimately cheaper than that owner was. That's going to be instant boost. Boost and profit. Boof boof and profit. Because we have to pay that guy 600 grand, right? And where this one usually falls off the way, again I'm giving this one a C is you don't realize just how much work that retiring partner is doing and just how much tribal knowledge was there. And when you come in, like for sure, you can set a new expectation with clients and some will leave and a lot will stay. But the fact remains that work has to get done. And the work that an owner is doing is the hardest type of work to replace. Because really, really capable accountants, I could tell you they're not hanging around old farts, accounting firms waiting for them to be bought out by someone else to then hang around. If anything, if there were really, really capable, like growth minded people in that firm, they would have been that person's retirement, they would have been promised the moon. And then hopefully if everything goes according to plan, they ultimately buy out the owner. And so if the plan is to come in and replace the owner and make all that money back, then you better be bringing a really good operator with you who's pro, probably expensive and they don't grow on trees. So that's not really a scalable approach to rolling up firms. So first one was general modernization of tech, giving that a C. Second was replacing the owner as the operator, given that a C as well. Third, offshoring, good old offshoring, given this one A, B. Because offshore people, you got to find them and train them just like you do onshore people. It's easier than finding onshore people for sure. But there's no shortcut to like having the right type of folks. And then you eventually trade one type of constraint for another where the constraint then becomes who's doing the client relations. Since I'm not normally tasking my offshore folks with that, to be clear, that's a more profitable business. That was how I was building my firm, bringing in a pipeline of both on onshore and offshore folks. The reality is there's more demand for what we can do than most of us can hire onshore people to fulfill that work. Also, big picture 2025, if there's a person in another country that can get the Exact same task done at a third of the cost then you're living on borrowed time. As long as you're employing onshore people to do that stuff like that's just the reality and there's a lot of ways to, to package that up around you know, patriotism and nationalism and all that. But nationalism isn't a business strategy. All hail capitalism. I don't know, I don't feel as strongly about all that as as I made it sound. Just feels like the reality of where the world's going. The world's getting smaller. So offshoring as a strategy for doing a roll up it can help profitability but it doesn't solve the bigger problems to scaling a a A firm which is do you have really capable people that are still going to about the the vision for the future that you are you're painting but still a B highest rated one we've got so far right. Number four, buying a tax firm and bolting on wealth management work. I had this at an A. I'm going to change this to a B5 and that's because wealth management work buddy, it is such good money, the best money, it's sitting in a bank account and I'm making a percentage on it. I love that we'll actually see where this goes long term. I'm. People my age, increasingly they're not using wealth advisors, they're just popping that money into an, into an index fund. But the fact remains, for whatever reason folks love to bundle their financial advisor with their tax work and you can, you can give them the whole song and dance of oh, everybody's working together on tax strategy and all that doesn't just make sense to have all that under all under one roof and it a hundred percent does. But the firm that is best suited for this is not the in vogue cool tax firm because where wealth management works best is frankly with a bunch of old farts sitting on a pile of money. Retirees or near retirees. It's not usually the, the entrepreneurs, the small business owners that are sitting on piles of cash yet. And so the entrepreneur's needs are much more humble. They don't have all that much in the way of assets comparatively but they're doing stuff like spinning up a 401k plan. Great. Now we got 20 more people that have hardly anything in assets that we have to fuss with. That's like that's not the avatar of a person. That is great for a wealth management practice. But if you're doing a high volume 1040 practice for sure, there's ways to bolt wealth management into that, especially if you're in a high net worth locale. It's not bad, but it's also not like the perfect tax firm to run. And that's why I'm giving it a B5. This episode is brought to you by Team up. Who will find you talented accountants in the Philippines? Team up, their motto, hire a person, not a company. So Team Up's difference is there for the folks that literally just want to engage the people in the Philippines to come and work for them, rather than like Accounto Corp. Who then employs a bunch of Philippines accountants. And then you pay Accounto Corp. Because sometimes the problem with Accounto Corp is you're paying as much to Accounto Corp as the actual individual that's on your team gets. That's kind of a bummer. I'm paying 2,000 bucks a month and only a thousand of that's going to my team member. Very common progression that I see with folks building offshore teams. They start with Accounto Corp for the first few hires and then they're like, we just want to do this ourselves. We actually don't like the middleman. And oftentimes it's actually impossible or insanely costly to get your team member out of a Counto Corp. So then you're kind of like trapped. Anyways. Team up, they've got recruitments, recruiterments on the ground in the Philippines who will find talented folks for you. You just work with them directly, same way you'd work directly with somebody in the States. If you haven't done it before, you're gonna have a bunch of questions. What about computer stuff? What about security? The answers for those usually the same as whatever you do for your, like, domestic team. What about disclosures? If you do tax work. Yeah, you gotta put something in the engagement letter. If you're using em for 1040 work, there's a standalone disclosure that you do. But I did both these in my firm. Wasn't a big deal. And Team up, they helped so many firms go through this that they can give you like, great expert answers and best practices for how to navigate any of these things that may be spooky. Even if you just want to have a conversation to learn more. Hit them up. That's Team up. Learn more. Check out the link down in the show notes. You know what I was just thinking about? Just how much I accommodated my clients. Crappy old banks that just created so many workflow nightmares for us. This is, this is an ad read for Mercury. Just So, you know, literally having clients share their password with you so you can log into a client's account to a bank, having to have them send you two FA codes, little two FA codes where the text literally says, never share this to FA code with anybody. So many problems with that. Don't get me wrong. Like, it's an essential part of delivering, like bookkeeping work. But then I would be so apologetic, like, you know, I'm sorry this is such a headache. I wish it didn't suck like this, gang. There are solutions for this. Like Mercury. I literally ditched a traditional bank and use Mercury now myself. The client gives you firm access, and then you assign user access for the people in your firm. And it can get super, super granular, like the way that user management actually should be. So next time when you get that stupid situation with a client that is not secure and they're annoyed about two FA Olympics, just remind them, buddy, this is, there's a, there's a solution to this. We can help you with this. We'll help you make the switch to Mercury. You'll have a vastly better experience, get a bunch of razzle dazzle features your, your traditional bank doesn't have. But then we can lock it down with proper access to whoever needs access to it. So next time they complain, don't apologize, say, here's the solution. Do you want us to help you through it? Think about it. All right? Learn more about Mercury. Check out the link down in the show. Notes to be clear. Tier lists, Tippy, top tier. It's S tier. So this S, A, B, C, D, number 5. Buying a tax practice to layer in cast work, I.e. bookkeeping work, or like accounting department in a box kind of work. And buddy, I'm giving this one an A. But you still got to make sure that those tax clients are a fit for the cast practice you're trying to build. Now, this is an A because you're taking tax work, which is usually cutting a check for the tax work once a year. Maybe there's a deposit, whatever, it's project work, and transitioning that into recurring revenue that is usually many times the size of the tax work. So you can take a small business owner with a $2,500 a year tax return and turn that into a $2,500 a month cash engagement. But if all I bought was the tax work, and that got me the relationship to then unlock the cast work, holy shamole, man, that is a pretty darn good ROI on that acquisition. In fact, if I'm you know 12xing on that one client I can afford for, for a few of those clients to go and still come out very nicely in the acquisition. Now, the bad version of this, speaking from experience, done this myself, the bad version of this is when you look at a whole tax practice and you're like, cool. All the small business owners, you're going to bring all your bookkeeping to us now and before you know it, you got a big hot mess on your hands. Because doing any and all types of bookkeeping for any and all types of businesses is nigh on impossible to do profitably. In fact, the only way to really do bookkeeping super profitably in my opinion, is when it becomes about all the other stuff around it that you're layering in. And to be clear, bookkeeping is, is classifying transactions and reconciling bank accounts. What most of us do is more like controllership, even getting into like app advising and helping them build their finance stack. But in my experience, it was the adjacent stuff, the needs more specific to that type of entrepreneur that we could solve that were free of the sort of token rates of bookkeeping and the perception of what bookkeeping ought to cost. When we were doing stuff that was a little further off the menu, but a very painful pain for that entrepreneur, we could frame what we were doing through the lens of FTEs. That is, if we don't do this, it's going to take up half of somebody's time on your team and that person all in is going to cost you 60 to 70k a year. You don't have to manage us. We're going to do it at a way higher level. So I can charge you three grand a month and you will pay that with a big old smile on your face, even though you thought your bookkeeping work should only be 700 bucks a month. That's the value of getting away from the chicken parm traditional what is bookkeeping and instead using bookkeeping as the doorway through which you get to a bunch of a lot more profitable stuff. But man, if you're buying a tax practice and can get cast work out of it, that is like the definition of arbitrage. It actually isn't. I think technically none of these things are arbitrage, but I got you to, I got you to watch this episode, right? That's the goal. You're still here. Okay, number six, this one definitely isn't arbitrage. Pulling the cash cycle forward. And this is something we don't often think about in a, in a acquisition is there's actually a whole bunch of different ways to bill for the same work in an accounting firm. But, but most traditional firms are billing like so, so late. Like, if you have tax work in a traditional hourly billing firm, you're not billing anybody until all that work is done. And oftentimes you've been doing that work for like nine months. And the inverse of that. In fact, let's go back to the CAS example. If you take a tax client and make them a cast client. So rather than just doing the tax work for that small business, we're now doing the bookkeeping and some other stuff. The way I billed for that was for 12 months. You're paying us a fixed fee. And that fixed fee covered the tax prep that happened the following spring. So if they're paying me for 12 months of 2025, that covered the 2025 tax prep that happened in 2026. If that client was previously just a tax client for the previous owner, we have now pulled that cash cycle forward just about a year rather than getting paid after the tax return done is done the next year. We've, we've got that cash now. And like, the, the details of like, does that ultimately end up being pure profit for me, boils down to in the acquisition upfront, how was all of that settled up? And also in the subsequent sale later, how is all of that settled up? But if it's based on, you know, say, recurring revenue, a subsequent sale down the road, I would argue you almost got a free year of work that you didn't pay for there. So be thinking about the timing of cash flows. That's actually a factor in how do I make sure that this works straight out of the gate. If some clients leave, if cash flow is a little tight, can we actually change the way the engagement works to pull those payments a little further forward? I was number six, given that a B pulling the cash cycle forward. Number seven, buying a cast practice or a bookkeeping practice to sell advisory work is a hot one. Everybody always says advisory. That's the future, man. Got to sell advisory. Everybody says that except for the people who have done it and accounting firms. And that's, that's different than the people who, who want to do fractional cfo. And that's what they're passionate about and they're building fractional CFO practices. And that's super cool. We need more of those people. But the people inside of bookkeeping practices who are really doing more like controllership, who then try to scale selling advisory. Not to say it can't be done. But it's very hard because it is reliant upon the most scarce resource you have in a practice which is like your most senior folks. And those people are usually already very, very time constrained. And then when they get really good and you throw a bunch of work at them, there's very little in it for them to not go out and do that work on their own. And so it's the reason why most CAST practices are selling controllership. They're not selling CFO stuff. And if the goal is to buy a CAST practice to then sell CFO work, I could, I could see an argument for this in a CFO practice as long as the CFO practice is okay doing bookkeeping work. And I mean, almost every CFO practice I know, they go into business and they're like, we're going to do CFO stuff. And they're three months into it and they're like, we just realized we have to do bookkeeping stuff also. That is, that is just the way that works very hard to do CFO stuff on top of somebody else's books. If there was an argument to be made here for a scenario where this makes sense, it's probably a virtual CFO practice going out and buying a CAST practice if they're already doing bookkeeping in house. Because then if they can layer in profitable VCFO work like this is probably got to be within a niche. Like if you just work with auto repair shops, you do VCFO stuff for them and you find a bookkeeping practice that is auto repair shops. Man, I could pay those people a good multiple if I know that 20% of those people will upsell into CFO services in year one. Otherwise I'm giving this one a C. Just because advisory work right now for cash practices, it's still very, very hard to scale. Number eight, buying a bookkeeping practice to sell bill pay stuff. I'm giving this one a D because bill pays very quickly. Going out of style with AI stuff. Accounts payable, it's the fastest changing part of the accounting profession just because AI vision models can do what OCR was doing before, but way, way better. Accounts payables, kind of the most deterministic way or thing inside of what is the norm for what accountants do. Like there's an agreed upon set of rules of what ought to be on an invoice, like payment terms and sort of what an invoice ought to be is kind of agreed upon. And it's why accounts receivable is much harder to automate, is how People are billed is much more willy nilly and across the board. Whereas how people are invoiced, the AP side, it's a little more locked down. People do still go crazy with this stuff. And you see some invoices that are wild. But bill pay accounts payable in terms of the amount of legwork that goes into it, it is shriveling up by the day right now. So that is a D. And there are people that run entire accounts payable practices. That is a D. Buying a bookkeeping practice to sell bill pay work. But I've shared this before. What I did, getting your fingers into bill pay to then sell cash advisory, that is an A. This is in practice for me might have been the most scalable and profitable part of our cash practice. And to be clear, man, we hated doing bill pay. Bill pay sucked. And getting somebody to sit there but in the chair and do bill entry day after day was nigh on impossible. There's one area where offshore hiring was incredibly useful because I would hire an American and they would be 20 days into this and they are like, I will go flip burgers across the street before you make me do another one a day. Another day of this. And right or wrong, we pull somebody in the Philippines to do this, we'd pay them top dollar. They would literally be the breadwinners in their family. They were so appreciative and it was the best job they'd ever had. That was ultimately how we staffed bill pay work sustainably. But what we learned was having all of the bills from a client enabled us to sell cash advisory and what I'm calling cash advisory. Really all it was was like 10 day cash projection. There are people that were cash constrained. They were making big like inventory purchases, but also had payrolls coming up and cash inflows would be up and down and we would literally measure this stuff out day over day so. So that they knew what their next couple weeks looked like from a cash standpoint. And we could sell that work at top dollar. They'd never had as clear of a snapshot as we could give them. I'm trying to remember. I mean, I don't think we had a single engagement where that work people weren't paying more than a thousand dollars a month for it. And this could be on a two or three thousand dollars a month engagement. But we couldn't do that work without having the bill pay stuff. So the bill pay was a means to an end of being able to sell that really profitable cash advisory work. I'm giving that One an A just because it worked really really well for me. Now would you go out and buy an accounts payable practice? Almost certainly not. But it is a factor to consider in a bookkeeping practice that you're looking at acquiring. Because if there is a bookkeeping practice that is doing bill pay for clients, I mean it's similar the same as how there are so many bookkeeping practices that only do bookkeeping and can only command kind of rock bottom prices. And those firms don't trade at very juicy rates. There's absolutely firms out there who are just doing books and doing bill pay and that's it. And we see that that's an opportunity to come in and be a better advisor for the client. As much as I'm not, I'm not anti advisory but I'm just realistic about what that looks like to roll out in most firms traditional advisory, very, very hard advisory around cash. It can be made very turnkey and delivering that is like what is the report? You know the template for our firm, the way that we recommend they look at this and just about anybody can put that information together. Doesn't require a huge level of expertise at that point the client is so reliant upon you. They're like I need this report to be able to operate my business and they'll pay really well for it as a result. Because for a business owner like name a bigger pain than than cash management. Not all businesses are run super tight on cash but many of them it's like that is pretty much at the top of their list of what they need. Today's episode it is brought to you in part by Makers Hub. Makers have an accounts payable platform, the one that is going like super hard on AI. Really good for large volume, complex accounts payable scenarios. And gang this is like a real arbitrage opportunity right now the clients we have with the messiest accounts payable departments, they're the ones with the most to gain by AI enabled AP stuff. Unfortunately the like the big boys, the traditional bill pay platforms is still relying on like OCR technology rather than AI vision models which just take like the automated extraction so much farther. In a vastly more detailed way too. When you can literally pull anything off a document, even handwritten stuff, the degree to which you can then automate not only entry but also the subsequent approval workflows. Really really cool. Makers up does some other stuff I like. Like they have a very very good two way sync with QBO so that maker sub doesn't become the stuff entirely. Separate source of truth if you use a different erp, they've got a really good API for building your own custom stuff. Even for like customizing how you export data en masse for import into another system. I've said it before, accounts payable. It is the fastest changing part of the accounting profession right now. If you want to help your clients leading the charge into kind of the modernization of their back office. Makers of a great tool to do it with. To learn more, check out the link down in the show notes. If you've ever seen my tech selection pyramid, it's basically like Maslow's hierarchy of picking out tech in your accounting firm. Because picking your firm in the right order is very important. You start with the foundational tools and then you layer in the automation stuff on top of it. And wouldn't it be nice if your foundational tools could just do all of that stuff? One of today's sponsors, Client Hub, they're trying to do just this smooshing several of those layers together because they're a practice management system. But they're also doing really cool month end close automation stuff for bookkeeping practices. So you get all the practice management goodies to like manage all aspects of the firm, but it's got a super deep integration with QBO and 0 and has like a step by step process for managing every aspect of the close. Even like some cool stuff like pulling in uncategorized transactions and you can push those straight out as a client task all inside of Client Hub. Core part of Client Hub is kind of having like this, this two sided task management system where there's the work that you do and anytime you need the client to do something, you push that task to them. Because the reality of getting work done in an accounting firm, you gotta work together. We're most often blocked by this stuff that we need from clients, right? So pulling that all together into one system and doing some cool month end close automation stuff all in one place. Client Hub's doing a really cool version of that now. And if you're a bookkeeping practice, it ought to be on your short list of PMs to look at. Learn more about Client Hub, check out the link to down in the show notes. Arbitrage opportunity number 10 buying a bookkeeping practice and then layering in payroll work. Yuck. I'm giving that a C. But there are some people now running super cool profitable payroll practices. In fact, we had Matthew Patrick on this podcast in the past who's I can't remember what he said. It's like an eight or $9 million payroll practice, something like that. Payroll practices trade at higher rates than tax practices, than accounting practices. So if you're trying to build a scalable payroll practice, which is honestly a very cool practice to build right now, actually just had a conversation with a firm owner yesterday who's like, we gotta do payroll for all of our clients, but it's taking a bunch of the time of my staff that I. And I don't want them to spend that time on it. But then if I send the work to an ADP or paycheck, something like that, it's not getting done to the level that I want. There's another lady in town that runs a bookkeeping practice, but she doesn't do it to the level that I want. What do I do? Because I don't want it. This is the opportunity for folks to go out and run killer payroll practices where you can partner with accounting firms that really don't want to do this work. If you're, if you're looking for inspiration, go back and listen to that. That episode with Matthew Patrick. In fact, let's link that in the show notes if that's interesting to you. Building a payroll practice, buying a bookkeeping practice to get a bunch of payroll work completely changes the economics of what you could pay for that firm. Right? That's an example of where overnight, most of those clients, they will happily have you do their payroll. Because who wants to do payroll? It's almost like being the garbage man of a small business. That mean, I don't know, nobody likes it. Number 11 giving this one an A. We've got an A, and then last we got an s tier. Number 11 giving this one an A, buying a tax prep practice and selling tax strategy. Most tax prep practices don't sell tax strategy because they just don't make the time for it. It's usually a capacity thing. The best place to start selling tax strategy work is at the end of the year. I mean, most tax pros, they are so shot by the end of the extended deadline that they're like, yeah, we'll do some of that. And then the holidays come and they're like, man, let's just, let's just roll into next year. Really. Tax strategy work, you want to be doing it both in the summer and at year end, and people get caught up on what is tax strategy? Honestly, tax strategy. Is any tax work not happening in the filing season? It is. It's kind of as simple as that. We're talking about it in the summer. We're talking about it before year end when we can still actually do stuff. And right or wrong, tax strategy work trades at 2-4x the rates of tax prep work. It's one of very few things that we do where our work can be tied to a very clear financial outcome. And that's one reason why people get stuck on this. They're like, is this contingent fees? And it's like it's contingent fees. If you say I'm going to take 50% of your refund, but that's not what we're doing. We're saying you're going to pay $200,000 in tax this year. I'm pretty sure we got a way to beat that way down. So I'm going to charge you 10 grand for it. And there's not like there's not many kind of found money elements to running an accounting firm besides this, but particularly like a good target firm for this is one that has wealthy clients that are paying a lot of tax. Tax strategy work doesn't work if somebody's a W2 earner and making a hundred grand a year. It's, it's very hard to justify. You can still do it. It's just hard to justify much in the way of fees. But if you've got high net wealth clients and they're not getting any sort of proactive stuff like that is a service that there will be a big appetite for from day one. So you can immediately come in and cash flow that sale by layering in more profitable work. But you would do that by leveraging number 12, rolling out three tier proposals. This is my only S tier podcast listeners are so sick of me talking about three tier proposals by now. Accounting firms that right now are just giving a price to clients missing out on big time profit opportunities. And this is like this soapbox I've been on recently around three tier proposals. This is from conversations in my community with firms who are like I did this for the first time and it was like an immediate 20% profit boost. Like it, it is very, very real. So if you look at an accounting firm that is just giving a client a price for every single engagement, my belief is that anytime somebody a single price you're losing money because every single client wouldn't be happy to pay the same thing. By giving them three options, bronze, silver, gold, they're able to self select into the option that feels right to them. And if you do that right, gold isn't three times as much work as bronze. It's just a more premium delivery of the same work. A Mercedes will get you to McDonald's the same way that a Camry will get you to McDonald's. So then why do people buy Mercedes? Don't know, man, but it is a force of the universe. I deal with it every single day when I buy things. So why would my firm not do the same? Right? That's all three tier proposals are. It's just better capturing people's ability and willingness to pay. And so if you're stepping into a firm that doesn't do this, there's genuinely a like tens of percent of profit that is being left on the table just by opening this option up to people for the first time. Just because like most of us, we optimize for. And it's very hard when you run an accounting firm not to optimize for the, for the wrong things. Just to be consumed with the tree triage and the day to day and what the clients are asking of you. And ever get your head above all of that to be like, okay, what are the, what are the best things I could spend my time on? And it like, very rarely do you get to, well, how to make this a more profitable engagement next year, Especially when it deals with a little bit of discomfort and you know, thinking about the human on the other side of that and what are they gonna say? And so we're like, no, let's go back to looking at technology or workflow or something like that, right? But there's a lot of like captive money in firms from clients who will happily pay more than they're paying today. We fixate on the ones that don't want to pay anymore. But the opposite end of the spectrum is true. Also, you got a bunch of clients on your client list that would pay more for what you already do. And the big opportunity with three tier proposals is offering even more premium versions of service delivery. That 20 to 40% of your client base will be like, yeah, I'll pay another 50% for this like VIP version. And that, that work they're now paying 50% more for even in a 50% margin firm. Great. That's now twice profitable of work. You could do half of the work, serve those people at a way higher level and make the same money and I don't know half the time or a little more. So if I'm looking at a firm to acquire that is a very real consideration is how much of this are they doing already? Or are there captive profits to be found just by like approaching renewals in a more strategic way when it comes to firm acquisitions. Let me know what you think. Any other opportunities here? I didn't like vanilla stuff like economies of scale and all that. Most of that is not all that real in accounting firms because it still boils down to humans doing a lot of nuanced work. I think what economies of scale is actually usually a like like what they're really saying is I'm going to roll up a bunch of firms and then be able to sell it at a better multiple. It's not really economies of scale. That's just gaming the way capitalism works right now. Which feels awfully sketchy to me. But you got any advice on this stuff? You've done any of it yourself or even you're thinking like would it make sense to add A to B? Is there an opportunity there? Drop that stuff down in the comments. Every time you raise those questions we have that conversation. It helps everybody else too. And gang, thanks for being here today. I'll catch you in the next one.