How To Buy a CPA Firm in 2025 (Full Process) | @ryanbakkecpa

This company babysat their clients too much.

Were there any red flags that presented themselves to you?

I had given them an offer, but they said no to me. Originally, the broker was talking in their ear saying they could earn more money somewhere else. I didn't hear back from them for two months.

How did you find this deal?

Depends on where this podcast is getting posted.

Ryan, you bought a two and a half million dollar accounting firm with 330 clients. So in this conversation I just want to go through, like, what was your process here? Right. So how did you look at this deal? What made you decide to buy an account firm in the first place? What was kind of your terms and your structure for the buyout? And what were the green flags that you saw that made you feel like this was going to be a good move? So let's start out here. How did you, how did you find the deal initially?

Yeah, first I would. First I wanted to figure out if I wanted to grow, was it better to do it organically or was it better to acquire? Because we even had a conversation a couple years ago, if you remember, I said I would never buy an accounting firm. I would just do marketing. And the issue is organic growth is great and it's extremely profitable, but it does take a lot of time. And it's also harder to scale it as you continue to go. Because the way to get to 0 to 3 million in my case versus 3 to 6 million requires a whole different skill set and really a whole different team, an even bigger team. So I did the math and it's like if I wanted to double my business and go from 3 to 6 million dollars, I would have to spend 450,000, $500,000 just in ads. I would have to pay sales commissions on that. You know, there's another $120,000. Not to mention if I was to double my client base, because that's what we had at the time was right around 300, 350 clients. If I wanted to double my client base, I would also have to increase my staff by about 50%. Get them, get them trained up. So when you added up all those costs, it literally would have costed me a million dollars to double my business. And we didn't even talk about the amount of time that that would take. Right. It would take me a year and a half to two years of getting that on board, like the sales calls, the clients onboard at everything. So it actually was cheaper and it was quicker to acquire a business rather than grow it organically. And that's what Made me originally decide to buy an accounting firm.

So you decided to buy before this deal presented itself to you? Right. How did you find this deal? Did you go through some kind of business broker or was this just simp through your network?

I had a student of mine in one of my CPA coaching programs and she was slacking a little bit and I asked why, why was she not doing a lot of this work that I had, I had her do? And she goes, oh, well, I'm doing some contract work right now for a company. They just lost their key cpa. They're paying me a huge hourly rate to review these returns and it's really profitable. And I'm like, oh, well, tell me more about it. I'm, I'm interested. And found out, you know, it was a two and a half million dollar accounting firm. It had 300 clients. And it looked like a really good acquisition target because a lot of the clients were, you know, doctors, high net worth individuals, real estate investors living in Los Angeles.

Okay. And so what was kind of the analysis process like? Like what, what were you looking at to determine whether this was something you wanted to move forward on or not?

Yeah, I mean, the big, at least my big key is the relationship of business returns versus personal returns. Okay. And also the, the dollar amount per relationship. Right. So if there's, in this case, there was 3, 300 clients, 2 1/2 million dollars in revenue, it was averaging like 80$200 per client. So that's good. That's a good. Now there might have been some clients that pay 2,000 and there's some that pay 20, but on average it's 8,000 per person. You're also looking at the relationship between how many business returns do they file and how many individual returns. Now ideally, I wouldn't buy a firm that doesn't have at least 50% of business returns compared to 1040s. So if you're going to have 300 clients, you want to have at least 150 business returns, if not more. Because the clients that have both individual and business returns, they're going to be more stickier than clients that just have their 1040s. And we're seeing that in our churn numbers right now. The churn right now is about 16%. And, and more than half of those people are all people that just had 1040 only.

Interesting. Do you know what the churn is like just on the, the business owner clients?

The business owner clients is 5% or less.

Wow.

Yeah.

Yeah. And I mean, that's what you would want to see just at a firm that didn't undergo a massive, you know, shift in ownership.

Yep.

Yeah. Okay. So you're looking at the ratio of personal to business returns. Right. What else were you looking at? Were you looking at like the, the makeup of their staff and like what their day to day operations looked like at all?

Yeah. And one of the things that was really influential in that was, my friend, was doing the contracting and doing the review. So they were able to see in and out of the operation and kind of how clean were the tax returns, you know, what mistakes were, the people the company making. And it wasn't too many of them. They just needed more systems and processes. And that's probably the biggest lever that you can pull with a lot of accounting firms is to just revamp the process from A to Z of how they, how they bring in work and how they deliver work. I would say some other things to keep in mind too is you're looking at that whatever's coming in on monthly bookkeeping. So those clients that have their monthly books there, their business return and their individual, they're going to be way less likely to leave also. So buying a business that has some sort of, I want to say this one had probably 6 to $700,000 of like bookkeeping work that was recurring like that you're, you're wanting to look for those types of services rather than just once a year type service.

Yeah. Just to like kind of smooth the cash flow out throughout the year, you're saying.

That was something that I wish I would have thought more about when buying this company is outside of that monthly bookkeeping work. When was the tax work actually being delivered? Because this company, they babysit their clients too much, in my opinion. So they were, they were super lenient on like when clients can get them documents. What Exactly. What documents? They got them all the way up into the point where they would extend the tax return and just wait for the IRS to release the transcripts, the wage and income transcripts, and then they would file the return based on those. They kind of babysat the clients. And because of that, like 50 to 60% of the tax work was being delivered in the last three months of the year. Wow. As opposed to like, you know, more spread out. Now most accounting firms are going to operate that way where they collect a lot of cash from like January through April or May, and then they're going to collect a lot of cash from, I would say August through end of October. But that would be one thing that I would look More into is the seasonality of the cash flows. See, on a profit and loss statement, you're not going to see that. All you're going to see is total revenue, total expenses for the year. You want to, you want to get that PNL broken out by month so you can actually track like revenue year over year. But, but more importantly, like, when is the revenue coming in? That's something really important that I would, if I could do it over, I would look at that. I'm definitely looking at that more. And other acquisitions is like, when is the cash being collected? Because like, I might have to front load some costs for, for, for employees while we're not bringing in revenue until we bring in, you know, a million bucks in one month when we do all these tax returns.

Sure. So it's like just knowing going in, okay, I've got three slow months ahead of us, so I'm going to have to front a little bit of this and then we'll get into our good season and I'll be able to recoup.

All that and then some or it's pushing on the team, revamping the processes so it's like, how do we get. Work out right now and get, get paid for it?

Okay, so that's kind of what you were looking at. And so at this point you, you, you're like, okay, this is a good deal. This is something I want to move forward on. What does the process actually look like? Like, how did you get in touch with the previous owner and start that conversation up with them?

Yeah, most, most accounting firms kind of just start off with the introductory call to get to understand like, what's the seller's interest, what's their end goal in mind, maybe or maybe not, what price they're looking to get at it. And most firms now the most important things that, that's going to dictate, like how fast the transaction goes. But then also like as a buyer, how much you're going is whether or not a broker is involved. You know, for better or worse. If it's very similar to like a real estate agent. Right. If an accounting firm broker is involved, you are guaranteed that it's going to take more time and it's going to cost more because they have to get paid a commission on it. But also you're going to be less likely to get a sweeter deal because a broker is going to whisper in their ear of the client and tell them things that they can get a lot more money, they can get a lot more cash up front when in reality that's not how things work all the time. As a buyer you're less likely to get a really good seller, finance or owner carry deal if there's a broker involved. You know brokers are going to want to push for as much money up front to the seller as possible and the least amount of money on an earn out or on the back end. So that's one thing to think about is the firms that I've targeted so far have mostly been off market deals where I strike up a connection with the seller directly.

So if it was on the market and they have a broker then you almost need to get your own broker to like negotiate for you and back and forth.

Yeah, your own kind of like real estate you would get, you would get if you didn't want to get a broker. See that's the thing on these platform companies like accounting practice sales, they charge 15% of the sale price and they rep, they claim to represent both the buyer and the seller. But I don't like one person. You would never have a lawyer represent the buyer and the seller. You know they do that in real estate. They call it, well it's really double dipping but it's called something else for dual representation or something like that. But you, you would have your own lawyer and then you would have, the seller would have their broker that they're working with. But yeah, if a broker is involved you're going to pay more money for it, it's going to take more time and you're less likely to get as a good of a deal.

Would you consider using a broker in a future acquisition? Are you basically like just anti broker?

I would use a broker and I'd be open to that. Those deals kind of get pushed to like the bottom of the pile but I would be open to it.

Okay.

Because it's just the deal flow. The amount of accounting firms that you see on these websites where it's like sub 500k revenue, I mean it's 4 or 5 of those for every one firm that's over $1 million in revenue. And in my opinion those 0 to 500k businesses just aren't really businesses. It's more like just a high paying job. You know, if you're, if you're buying an accounting firm that's under 500k revenue, that, that is another job for you. You, you have a job to do. You really need to buy something that's at least seven figures or more in revenue. So then you can afford to hire an admin, you know, a Tax return preparer, a reviewer, a bookkeeper. You can hire these people and at the end of the day you can still net out 4 or 500k without doing a lot of the work.

Yeah, I mean, if you're buying that like six figure firm, you really are just buying like whatever the contract value of their book of business is. Right. And that's the problem too is I. A lot of them, like, you know, even if they're in a contract with the client for a year for a bookkeeping engagement or something, it's like A, if the client doesn't like what, whatever kind of changes you make, they might just leave at the end of that year and then they're gone. B, they might just stop paying. And what are you really going to do to chase after them over that contract for a thousand bucks a month? I mean, you're not going to go sue for that. Right. So what do you, what are you.

Going to do as a buyer? The more money that you put down and the more money you either take out as a loan and guarantee, that's more risk shifted to you rather than the seller. Because if you just go to the seller and you know, you cash them out 80%, 100%, like there's no reason for them to stay on. There's, there's no reason for them to stay on and, and oversee the client relationship because they already got all their money.

Right.

So that's why unlike real estate, most business sales, especially professional services firms, doctors, dentists, lawyers, accountants, there's going to be some form of what's called a seller carry. Now a seller carry can be either a seller finance note where it's like a fixed interest payment and it works just like a loan, or it's going to be what's called an earn out. But either way, Most, you know, 90% of accounting firms that sell are going to have some form of seller carry. The seller is going to hold back money from the sale and in order, in order to get that money, it's either going to be a seller finance note where they loan it to you, or they're going to have to earn it by providing services to you, which is mostly just making sure that the clients stay on.

Yeah, okay, I want to get into the deal structure and the terms and the like valuation of the firm and how that works. Let's back up because you, so you had that introductory conversation with the previous owner. What were you trying to get out of that conversation?

I was primarily trying to get from that conversation the timeline on when they Wanted to sell, was it going to be post October 15th or before? Because there's some pros and cons to that. Right. If you close after tax season, you might think that that's ideal because everything's a little bit slower. That also could be the worst time to buy because no more money's coming in the door. Right. So I had to think a lot about that. It's like, do I want to buy it October, you know, October 16th or October 20th? Because then money is not coming in, starting to come in until February or March. Right. Timing on it, how exactly they would want to sell it? Because originally they had a. They had a broker and I had given them an offer originally, and some of that was cash upfront, but they had said no to me originally, that offer that I gave them because they, the broker was again talking in their ear saying they could earn more money somewhere else. I didn't hear back from them for two months. So nothing from. They told me no, but I didn't hear anything for two months. And then it was like three days before Christmas, I get a call that the deal's back on the table. So December 22nd, I'm out. I'm going out to dinner with a friend and I get a call that the deal's back on the table. And then we're in due diligence. There's a contract, and then, you know, early March, I own the company.

And what is that? What does that due diligence process look like with an accounting firm? What are you looking for there?

Yeah, I'm looking at previous year's tax returns. I'm looking at profit and loss statements. I'm looking at their. I'm looking at their work papers and how they develop a lot of the work. If. Is it quality work? Are they just stitching stuff together now? You're not going to get all this. You know, I was fortunate enough they let me interview all their employees one on one before I bought it, which is cool. Again, are you going to get everything out of it? No, but it's good to do that. So you're looking at that. I really wish I could have got like cash receipts to see when the seasonality of the cash flows were and better understand that they're not going to give you the client list until they. Until you sell it. Now, see, that's another thing. If they, if you go with a broker, a lot of times the brokers make them disclose customer concentration risk. See, if you had, if you had a client that made up, you know, more than 5% of the firm's revenue, like that person has to be siloed out. And most deals, like most accounting firm deals, where there's a lot of customer concentration, you know, the buyer should know about that. It's just the same thing in real estate. The buyer want you. Buyers should know about rate, what do you call it? Radon or gas in the house. Right.

Interesting. Okay, so due diligence. And was there, were there any like red or yellow flags that presented themselves to you in this due diligence period or. Everything basically checked out on the first pass.

Depends on where this podcast is getting posted.

YouTube and Spotify.

Yeah, most. Most of it checked out. I would have, I, I should have spent more time on the seasonality of the cash flows though. Yeah.

And how exactly would you analyze that on a future deal?

I would, I would be breaking out their P and L every month, seeing what's recurring, what's not, when are they collecting cash on the non recurring work? Because think of it this way, it's like there's recurring revenue, there's reoccurring revenue. So people are like, what the hell is the difference? Well, recurring revenue is like cash comes in every month and it hits the first of the month or the end of the month. So that'd be like if you, if you had Diet Coke ordered on Amazon prime and it just showed up to your doorstep every single week. Right. Reoccurring revenue is revenue that you plan on it being there because they've been a client for however many years. You don't have a guarantee of when it's actually going to get there because a lot of it's dependent on the client. But reoccurring revenue is like, hey, every time you go to the grocery store, you're going to buy a case of Diet Coke. But not all the time. Maybe you'll forget. So that's the difference between like recurring and reoccurring revenue. And the more like recurring revenue that you can get when you buy a business, the better that's going to be of a deal. You're. But you're probably going to have to pay a little bit more. All else equal, if you had two, if you had a million dollar accounting firm and a million dollar accounting firm and one was all recurring $83,000 a month and one was not recurring like this, the one that is recurring will sell for way more money.

Well, that's why I like SaaS. Companies trade at such a high multiple.

Yeah.

Because it's all like they've got a Million clients paying, you know, 2, 97amonth or something. And it's like very, very predictable. They've got their churn rate, you know exactly what that's going to be, you know exactly what their acquisition rate is and their growth rate. And so it's like one of the safest, most stable bets you can make until some AI comes out that does the thing their software does.

DocuSign.

Okay, so you were going through this and should have looked a little bit deeper at the like seasonality of the cash flow. So as you get out of due diligence, what's kind of the next phase here?

All right, if you're out of due diligence, you're, you know, drafting the final contract and the terms. So this particular deal was there was no, it was, there was actually no sale price. There was no sale price written in the contract. It was just a certain percentage of the revenue that was collected for four years, over four years. So essentially you're taking the existing client list as of sale date and you're looking at those clients and then fast forward a year later, or in our case it was December 31, 2025, and you're looking at how many of those clients stayed. Right. And then they get a certain percentage of the amount of clients that stay and then you do the, you do the whole thing over again. So then we look at the list next year and how many of those clients actually stayed. So the thing about structuring a deal as an earn out versus a seller finance note is you'll never pay more for a deal by doing an earn out than you would a seller finance note. Okay. Cause if I would have just done two and a half million dollar seller finance note over five years, I would have paid the two and a half million dollars plus whatever the interest was. So call it like 3, $3 million. But the earn out is they're getting 22 and a half percent of the revenue that's collected. Okay, well it's not going to be two and a half because clients are going to churn. We had 15% churn. It's really going to be like 2.1. Right? So they get 22 and a half percent of that. So they're going to get 400k the first year and then next year not all those clients are going to stay. It's going to be $2 million and they're going to get, they're going to get 22 and a half percent of that. So a little like another 400K, but over four years. The clients are not going to all be there. They're going to get like 1.4 million over four years which I actually get to write that off on my taxes, which is a different conversation. They're going to get 1.4 million over four years as opposed to. If I would have did a seller finance note, I was locked into paying that two and a half million plus the interest. You're always going to pay more for a deal by doing seller financing versus earn out.

How do you incentivize the buyer to like agree to an earn out versus seller financing it?

You can incentivize them by giving them upside and the, either the new clients or the cross sell of existing services. So if I have a list of clients that I think are good fits for other higher end services, I can offer the seller a percentage of that. Right. So they don't have to do any work. Like that's my job to market to them and to sell them a higher service. Or they just don't have a choice. Straight up. Like the business is not sellable for whatever reason. Key like employee or key partner left. Right. The business could not be sellable and therefore like they don't have a choice but to do an earn out.

Yeah.

If they want to sell their business.

Well and that was kind of the situation here. Right. With the key employee leaving. It's like, okay, they're kind of in a rock between a rock and a.

Hard place and nobody wanted to step up.

So they don't have a lot of alternative options.

That's right.

Which obviously gives you more ability to kind of like dictate the terms. Right?

Yeah.

So would you be looking for something more like that again in the future or would it be preferable to find a firm where everything's kind of going smoothly and they're just looking to exit for personal reasons?

I would rather that second one just because there's. You can actually bounce ideas off people. If a key employee leaves and they're out, then there's no, you can't. It's not like you can ask them questions about clients or ideas that were in the works, you know. But if you're working with a seller and you're on a three or four year earn out, like you're working with that person for the mutual benefit of both of you, but also the clients to. So you have all best interests in mind. And that's, that's why I like structuring it, you know, seller finance note, which is interest. Seller doesn't care how many Clients stay because regardless if 300 stay or only 150, they still get paid that same amount an earn out the seller. The seller is also incentivized to make sure that the client stays. Because if you as a buyer don't get the client, then the seller doesn't get their earn out share on the client. See?

Yeah. So it's just aligning incentives in a way where, because you, you're in a position as the buyer where you would rather pay more but end up getting a better outcome because you paid more.

Right.

And the seller is in the position where they were like, they'll be able to make more off the deal, but they have to work a little bit to make more.

Yeah.

Rather than having a situation where you're getting, you know, the cheapest price you can possibly get. But it's seller finance and so they're not incentivized to help you out at all. And so they don't make as much off of the deal and you get a worse outcome.

Long term business, a lot of times what you do this is similar to real estate because when we had drafted the loi, we actually gave them two or three options. We said we can do this earn out deal over four years and you're projected to make this amount of money. We could also just buy you out up front for this price. We'll take a loan out and buy you out and then we're done. But you're not gonna like that price. This example, you're gonna like the price, but the terms aren't the cause. You're getting the money over four years as opposed to the first year. So then the seller gets to pick like which option that they wanna go with. You know, do they want all the money up front but it's less money or would they rather get more money but then they have to do work for four years? Yeah, it's not really a lot, you know, much work because they're not actually handling the client's file. All they have to do is just help make sure that the clients stay on board. Yeah.

What's the. So you know, basically you, you know, draft up this contract, you know, both parties sign. What's the process like for the actual handoff like of the business?

So in the accounting space, you can't just hand over client files without the client signing consent. So one of the things is you have to get consent from all the clients in order to get their information over. It's just a doc, it's not DocuSign, it's different tool, but they have, you know, they get a notification, I would say to back up from that. A lot of it was email marketing. We did email marketing and we did, like, paper flyers to their addresses to announce the ownership change. And so we, I personally, like, hand read the emails, knew exactly what to say to be able to have the ownership transfer. And we had, we probably got. We probably got like 60, 65% of clients to say yes, they're staying with just the emails that we wrote out of the entire list. And then we probably picked up another 10 to 15% by calling them. So we did, we, we. We hammered emails for like, two weeks announcing the ownership change. I flew in before we bought it to, like, meet some of the potential clients that were kind of on the fence. And then we just hammered out phone calls to, to get us to that 80 to 85% retention. Yeah.

So you just basically lost the 15% right there on the front end?

Yeah, they said no, it's really a.

Recurring, like, you know, you're losing 15 every year or something like that. Okay, so that's, that's client files. What about, like, handing off the. The business bank account and, you know, the legal ownership of the business? Is that at all, like, stairstepped with the earnout or is that just day one?

Depends on how you buy the business. See, we. We did not buy the business. We bought a client list. So when we bought the. When we bought the accounting firm, we did not buy stock in the company. We didn't buy equity in the company. All we did was buy the client list. So we weren't required. We didn't buy the office. We didn't buy any furniture. We aren't required to keep all the employees. All we did was say, hey, we're purchasing this client list here, and the seller is entitled to a certain percentage of revenue from that client list. Well, we, we don't. We're not absorbing any of the previous liabilities for that company. We don't get any of their accounts receivable. We don't have any of their employees. All we're doing is buying, purchasing a client list.

And so then you have to go through and transfer, you know, the employment contracts with the employees you want to keep, transfer the billing with all the clients, and it's basically just a merge into your existing firm, like day one.

Yep, that's right.

Okay, interesting. Would you do it like that again in the future or would you like. Are there, are there pros to doing it the other way where you like the actual company.

Not, not that I can think of most, I would say some of the deals that we're seeing recently. The seller wants to have confidence that the buyer is not going to fire everybody because that's the fear of what like private equity in the industry is doing is they're just buying giant books of revenue and laying off employees and implementing offshore and AI. I'm not, I'm not opposed to doing the stock or an asset sale, but the client, like just the purchase of the client list makes the most amount of sense. It's also most, it is beneficial really to the seller because when you sell a client list, it's all considered goodwill. And goodwill is taxed at capital gains rates 0, 15 or 20 versus if you're selling like equipment or you're selling a building, you're going to have depreciation, recapture tax, you're going to have ordinary income rates. So selling your, or selling your business and it being, you know, 90% goodwill, it helps you save so much money in taxes as a seller, as a buyer, it kind of sucks because I have to amortize that cost over 15 years so that whatever that purchase price amount ends up being, which will be 22 and a half percent of gross revenue for four years, that will be my cost basis in the firm. Right. So if my cost basis ends up being if I pay them 1.4 over four years, that's my cost basis. And then if I sell the business for you know, 3 million or 4 million, then my goodwill or my capital gain is different between my 1.4 and whatever I sell it for.

Is there any? Because I could see there being a situation where like if you're, let's say you don't own an existing accounting firm, you'd obviously just have to buy the asset. Right. Or I suppose you'd have to set up your own company.

Yeah, well, that's the thing.

I imagine there's, there's, there's people watching here who aren't in the exact situation you're in where you're like, like you've got an equal sized firm and you're basically just, you know, gobbling up this other firm and merging it into your existing operations. So do you like, do you know what other people are doing in kind of different situations there you would do.

An asset or a stock. Still, if you wanted to buy the systems of the new company. Like if you wanted to, if you really like their tax software, you really like their CRM and you really liked everything about the company, then you would do an, you would do a stock sale and own the company and own everything. I think the most money is made is you, you use your first accounting firm, like whether you started up from the ground to build your process and systems and then you buy accounting firms that maybe not be using those systems and you, and you merge that together and you get, you get so much lift. Like we'll probably end up cutting costs by 200 to $250,000. Cutting costs by implementing our systems and processes and people. And so if you think about it, if we're trading at a 5x multiple, not only did I make another 200 grand, but I also boosted the company's value by a million dollars. Right. By, by merging them together. So I would say for people that are listening that, that think that they want to buy an accounting firm, I would try to grow organically to a certain extent. Maybe that's like fifty or a hundred clients. Really work on exactly what the process is and the ideal. Okay, step one, step two, all the way to the end. Once you have that down, go and buy the, go and buy an accounting firm, the client list only. And, and fix what they don't have, which is going to be the systems and processes.

Yeah. Well, and especially with the private equity activity, like private equity has a kind of a minimum size of firm that they'll consider. Right. Because they don't want to be, you know, they don't want to be doing that nitty gritty that maybe you as a small firm owner would be willing to do.

And that's exactly the play and it's the opportunity right now.

Yeah. And so if you're a, you know, two million dollar firm, you go buy another two million dollar firm. You do that every couple of years. Over ten years you've now got a $10 million firm and you've systemized it and operationalized it and it's very profitable. PE will love that. They'll be all over that deal, man. But they wouldn't have been interested in any of the $2 million firms that you bought out.

That's right.

They're still so small, they're kind of messy.

Right.

But it really is about getting like getting up to critical mass where you can handle buying a $2 million firm because you also don't want to be the guy buying, you know, a three hundred thousand dollar firm. I actually, I talked to one of those guys recently. He's bought, he bought two firms over the last two years. One of them was great, got great employees, great clients from it. The other one, he Shut down the within, within two years after buying it, he shut down the office, fired all but one of the employees and lost like 80% of the clients. And that's all in that like low to mid six figure range. So it's like you got to be, from what you're telling me, you got to be able to take down a seven figure firm. And you probably gotta be a seven figure firm in order to take that down.

Yeah, that's accurate. I've never done, I've never seen anybody. Actually, I have one friend that had no firm and bought a two and a half million dollar firm. And he's doing all right. Yeah, yeah.

Was he an accountant previously?

Software engineer.

Interesting.

Yep.

Okay, well that's a story for another time. But that's, that's fascinating.

But I would say that like that's, that's the biggest, biggest opportunity right now is like private equity is not wanting to touch a firm unless it ebitda is over 2 million, probably 2 1/2 million. And so in order for that to happen, like gross revenue needs to be around 10, 10 or 11. So that presents the opportunity to, you know, buy a couple, two and a half, maybe a $3 million firms because on their own they're not worth as much as they are together. So if you have a $3 million firm, revenue wise, it'll probably sell for 4 million. You know, you got another $3 million firm, it'll sell for 4 million. Another $3 million firm, it'll Sell for 4. You put them all together and your gross revenue is 9 million and your EBITDA is 2. Like you're going to sell for, you're going to sell for 8x16 as opposed to the, you know, 12 that you would have got or 10 that you would have got. So it's, it's a lot like, have you ever watched Planet of the Apes? And they ape. He grabs the stick and he's like ape alone, weak. And he smashes it. And then he puts them all together and he's like ape together. Strong, can't break. Well, that's what mergers and acquisitions are in the accounting spaces. They all become worth more now that they're under common control. As opposed to real estate where like if I have a million dollar property in Chicago and a million dollar property in Miami, they don't just become worth more that I own them both. In fact, if I wanted to sell them both at the same time, I'd have to take a discount most likely because who hell wants to buy a property in Two different states. But accounting firms are worth more together, especially if they're on the same systems, processes, employees, and they share the same common control of ownership.

So what's your next move here? Are you going to keep buying accounting firms? Are you kind of sitting pretty at this level?

I want to keep buying more.

Yeah.

Yeah, I want to buy more. I want to market more a lot harder. We just hired 15 people in the last two months.

Wow.

So we're like, we're growing, and we're going to, like. I feel like I say this now, but I got another good 12, 13 years in me. You know, check back when I'm 40 and let's see where I'm at. But for sure, another good 10 years.

And are you going to try to take down more of these, like, two, two and a half, $3 million firms?

Basically, that's the ideal acquisition size.

Okay, what happened? Like, is it. Is it less favorable when you get a little bit bigger than that? Or what's. What's your reason for staying in that window?

We. I know. I feel that. I know and understand it the most. I understand the margins. The. The firms that transact in, like, the 5 to $10 million range, they're. They're all kind of over the place in terms of what systems are they using, what are they actually selling for? A lot of those. Because it's so hard for a solo person to build a $5 million firm on their own, a $6 million firm on their own, they're likely going to have to bring in partners and other people along the way. And what makes those deals so hard to actually transact is like, you have a $6 million accounting firm that's owned by three people. One guy wants out, one guy wants to stay, other guy doesn't know what he wants. And now there's four or five different decision makers versus just the one person that you're going to see with a sub $3 million firm. You're not going to get past 3 million on your own, most likely.

And how. How do you plan to keep finding those deals? You just building your network in the industry, or do you have some. Some secret system you're building out?

We're working on everything. I. I also own the domain IBuyFirms.com so I would be sending a lot of traffic to there. If anybody want, if anybody has an accounting firm that does over $2 million a year and wants to sell, please talk to me.

All right, Ryan, thanks so much, man.

Yeah, you're welcome.