Buying A Cpa Firm Due Diligence -

Due diligence for a CPA firm acquisition involves verifying that the practice's revenue is sustainable, its client base is transferable, and its operational foundation is stable. A solid due diligence report should evaluate four core pillars: , Client Base , Staffing , and Legal/Regulatory compliance . 1. Financial Performance & Quality of Earnings

In a CPA firm sale, you are essentially buying a book of business; its "stickiness" is paramount.

CPA & Accounting Practice Due Diligence - Poe Group Advisors buying a cpa firm due diligence

: Analyze accounts receivable aging and collection efficiency. High WIP (Work in Progress) or aged debtors can signal poor billing practices.

The goal is to verify that reported income matches actual cash flows and tax filings. Due diligence for a CPA firm acquisition involves

: Review 3–5 years of Profit & Loss statements, balance sheets, and tax returns.

: Break down revenue by service line. Recurring fees (e.g., CAS, monthly bookkeeping) typically command higher valuation multiples than one-time tax prep or lumpy audit fees. Financial Performance & Quality of Earnings In a

: Identify how much revenue is tied personally to the current owner. If the owner is the primary rainmaker, retention risk increases post-sale. 2. Client Base Analysis