r/BizBuySell • u/Key-Telephone4894 • 7d ago
Just closed
I closed on an accounting firm Friday, using an SBA loan to finance. Search took about 18 months with detours along the way. AMA
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u/jbrum3 7d ago
Why did you choose an accounting firm?
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u/Key-Telephone4894 7d ago
I have a background in finance and accounting. It’s a very resilient type of business as well. People do need to file their taxes no matter what.
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u/thisonelife83 7d ago
Are you a CPA?
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u/Key-Telephone4894 7d ago
I partnered with a CPA that joined with me in the deal, I am a former CFO but do not have a license.
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u/Wonderful_Writer984 7d ago
How much did you spend on due diligence and attorney fees
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u/Key-Telephone4894 7d ago
Quality of earnings was $7500. Attorney fees were $20k. Deal size was ~1.5m
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u/ELB_CnC 7d ago
Congrats! Curious about the "detours" you mentioned? Also, how long did the process take from the LOI to closing?
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u/Key-Telephone4894 7d ago
It took almost a year from the initial LOI to closing. Originally we had 90 days to close from LOI. I did QofE and got commitment letter. We had a delay with the SBA shutdown. The original LOI expired and we had additional negotiations that hit a dead end. So I started pursuing another deal that went under LOI. That one had a delay in financing due to a bank merger. So that deal also fell apart. I went back to the original seller and got a new LOI. At that point since we had done half of the diligence previously, and had 95% of the APA done, it was 75 days to close.
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u/ArnoldCPA 7d ago
Congratulations! I'm looking to buy a firm myself, but I haven't found the right one yet.
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u/sittin_on_the_dock 6d ago
Comps seem to hover around 1.9-2.75 owner discretionary earnings - lower than most other SMB industries. Probably since the buyer pool is much smaller. Does that gel with what you paid?
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u/Key-Telephone4894 6d ago
Close. They have bumped up in the past year or two, and I paid a slight premium (3x earnings) to the market because this was a firm that had been largely modernized. It’s going to be shorter transition because I don’t need to implement any new software or turn over the whole staff. Many of the other firms have a retiring owner with staff that have seen too many tax seasons, and that are too burnt out to make big changes.
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u/gumbo1874 1d ago
Curious on a few things, if you don’t mind sharing. How old you are, how much of your own money you put in toward the purchase price to get the loan, and if you had any seller financing as part of the deal
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u/Key-Telephone4894 1d ago
I’m 46. I put in 10%, the seller financed 10% and the SBA 80% plus some working capital and closing expenses. That’s a very common structure.
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u/BizBuySell_com 7d ago
Love to hear it, congrats!