$250,000 the new $150,000

Jadeja Partners historically has always had numerous accountants looking for $150,000 in fees. A new push towards $250,000 in fees as a required amount by interested parties has boomed over the last 3 months. But why the sudden jump? Lending: word on the street and through our own experiences over the last 6 months has […]

Jadeja Partners historically has always had numerous accountants looking for $150,000 in fees. A new push towards $250,000 in fees as a required amount by interested parties has boomed over the last 3 months. But why the sudden jump?

Lending: word on the street and through our own experiences over the last 6 months has seen certain banks push harder for business in the Accounting field; opening up more opportunities to current and new practitioners.

Restructuring: Current business processes and expenses due to client loss is bringing more practitioners to the realisation they either need to reduce overheads or buy fees. Excess capacity is a common comment amongst the smaller practitioners. Top and mid-tier restructuring also tends to bring new drive for fees through new start-ups or current practitioners trying to secure a new quality staff member.

Customer loyalty: Winning and keeping clients has become tougher for some practitioners. Client’s now have more productised mediums to work with and expect more. Could this be the way of the future? Is loyalty amongst metropolitan clients different to regional or rural?

Lack of practices: $250,000 won’t give you many options to buy a practice in this market. It’s lean, very lean, although $250,000 does bring the purchaser closer to the buy-out of a sole practitioner.

Traditionally the sales band width between 300k~650k are the most desired. Interestingly these practices and this type of practitioner are now looking to fill a gap; take on new staffing, etc. with an acquisition of 100k~250k. If the structure is in place, these fees can go straight to the bottom line. The average of the tuck-in acquisitions fee level has risen, with-out any dilution of interest for over and above the traditional band width – 1m+ practices are still in strong demand.

In this current market it wouldn’t take long to place $250,000 in fees and this is keeping the entry prices buoyed.