Everyone’s Tech Stack fascinates me, probably you too… When we did due diligence on firms in the old days, pre-cloud, tech purchases were kept and stacked up in the back of the office, kind of like a historical sediment line. These days it’s all about computer diving and what we find is amazing. At the […]

Everyone’s Tech Stack fascinates me, probably you too…

When we did due diligence on firms in the old days, pre-cloud, tech purchases were kept and stacked up in the back of the office, kind of like a historical sediment line. These days it’s all about computer diving and what we find is amazing. At the time of purchase, the intention was brilliant but at time of acquisition, divestment or merger, the review uncovers forgotten purchases, unimplemented purchases, half-implemented purchases, never updated purchases, overlapping services and in essence, burning a hole in the pocket of the Practitioner.

Whilst at a recent technology event, we bumped into the tech-veteran himself, Mr Dinesh Choradiya CPA. During our conversation it dawned on me the amount of tech specialists we know, have met over the years and the many firms that are using them to help get ahead of the tech curve. There is an insatiable quest for knowledge by Accountants around what is the best tech stack – to better understand new opportunities, solve staffing issues, etc.

Therefore, why not ask our community. So we are, by releasing everybody’s Tech Stack through this survey.

But, we really need your help to make this worthy data. It needs to be between 250 and 1000 responses to make it meaningful. Yep… it’s a lot.

Knowing how little time practitioners have we have cut it right back to as basic as one can but with some cracker questions.

Once completed, we will send the findings back to all of the participants.

It will detail the market tech stack, what everyone is using but importantly what the percentage of allocated budget is being spent and if you have fallen into the trap of buying tech but not using it.

IMPORTANT – We have not received any funding, nor will we for this survey ensuring independence – we are not here to advocate one way or the other. We do believe this undertaking by everyone is a worthy one and ensure your confidentiality is a given.

So please join us and kindly help everyone in the Accounting Industry by shedding some light on your Tech Stack as this is a journey into the unknown for many.

Surely the results will be fascinating.

THE SURVEY IS HERE

Any questions, please feel free to reach out.

Kindest regards,

Magnus 0408885944

A Happy New Year to Everyone – May it be a fantastic year for you, your family and all that are close.

As the year ended, we traveled around major cities and had a chance to meet with many of our old contacts in the industry, buyers and sellers, listening to each about their last 12 months, from positives to negatives, needs vs wants and the dreams.

We thought, maybe you’d like to know some of the gossip, shortened and redacted into bite size intelligence.

What’s happening out there in 2024?

Well, there are a lot of secrets, but we have gleaned a fair bit of intel around larger players entering the market from overseas. This wave seems to continue to lap at the doors of larger players that see Australia as not only a fertile ground but also a safe space to invest.

Smaller firms: 1m mark are ready to acquire practices of the same size to about 3m.

Small: Medium firms have a broader reach seeking tuck-ins of $500k up to 5m

Medium: Large firms seek that 1m tuck-ins to 10m flagships

Large to The Big 4 – well, can’t say much about the Big 4 other than UHFFFFF but this has set the larger firms into hunting mode and that’s not just for other flagship firms but for the Big 4 clients and importantly of the staffing opportunity.

Are the banks still lending?

YES! After an interesting 2020/21 where we saw some of the key Professional Lending Bankers move to other banks, this has led to a revitalised push by many to up their game in our space and thankfully saw their policies bear fruit in the industry during 2023. We have no doubt 2024 should see better traction, as they have settled in well now, helping buyers from partnership buy-ins, buy-outs, management takeovers and favourable refinancing terms.

Who’s talking about selling?

Cultivating a sale takes a long time in this industry, generally a long-term contact or an introduction from another long-term relationship. If not, there is an internal process of the vendor to gain trust with the party who is helping them as well as an internal journey which can take a longer time.

We are currently talking with parties that range from $300k through to $10m+

[No, they don’t show up on the AFR Top100 if not they would have been approached about once a week by some of you over the last year]

What are the buyers profile?

If they are new to the game they believe they know it all and are fairly flexible but naturally apprehensive and data seeking.

If they are not new to the game and are savvy buyers, if you want top dollar you are going to have to prove you are worth it, from good standing EBIT multiple to years of stability with gentle growth on revenue and skills.

Each size of firm brings a different culture on top of the location and direction of the practitioner.

What is the ‘current’ sweet spots sought by buyers?

Profitability: 30%+

Opportunity: Integration of additional services

Staff: Good Accounting staff with Partnership prospect

Location: Major cities, Regional & Rural hubs, plus the ability to relocate

Revenue Bands: 300k-1m, 1-2m, 2-5m, 5-10m+

Partner to Revenue ratio: Lower the better, think 1m per partner as a guide although this can change with exciting partner numbers versus remaining.

What are Accounting Firms being paid?

‘Revenue Multiples’

Lows: 65-80c for antiquated, low profitability, in need of significant restructuring

Highs: Topping out at $1.50 for Medico and specialist firms

Note: the above revenue multiples are for Accounting services only

Specials circumstances such as impairment, death see a common scenario of a deposit then payment over multiple years up to $ for $. Or complete payment upfront for specialist practices.

‘Ebit multiples’

Bank funding and savvy buyers will always look at the multiples

Range: 2-6 times

Note: if you are a highly profitable firm, say 50%, please don’t think this would equate to a 6 times multiple equaling $3 for $

The Deal = The Terms

Flashy numbers don’t take into account the clawback and second phase to the transaction i.e the contract. The contract should be looked upon as the second negotiation

Jadeja Partners

We are long-term partners in the industry, coal facing, expert negotiators, transparent and most importantly culturally aware (business and country of origin).

If you’d like to have a confidential conversation, receive a market appraisal or just catch up for a face to face please let us know.

Mobile is on – lets go 2024!

Magnus Yoshikawa

M: 0408885944

Each year the Buy Grow Sell Summit team, led by Aspect Legal and Exit Advisory Group, bring together SME thought leaders and advisors for a summit specifically designed for small businesses.

Buy Grow Sell Summit 2023
5 & 6 September | 9:00am – 1:30pm
This is a FREE Live Virtual Event
Register Now

This year, you’ll hear from Mark Bouris AM, Janine Allis, Joanna Oakey, Simon Bedard and 15 more expert business advisors (all with first-hand experience, buying, successfully scaling and building towards sale or divestment). This event will be packed with practical insights and is an invaluable opportunity for small business owners & entrepreneurs to prepare for whatever’s next on their business journey (there’s never been a better – or more important – time to).

Here’s what you can expect:

• The latest trends shaping small businesses and their owners as they navigate Buying, Growing, and Selling in one of the most volatile economies we’ve seen in decades
• First-hand experience and stories of buying, growing and selling from iconic Australian SME thought leaders including Mark Bouris AM (Yellowbrick Road), Janine Allis (Founder of Boost Juice), SimonBedard, Joanna Oakey, Lucia Vuong, Head of Seek Business + 15 other experts in their field
• Practical tips, tools and relevant strategies you can walk away and implement in your business-but there is so much you can be doing right now to ensure your next steps are strategic, well informed and successful.

Tickets are free – but limited, so reserve your seat now – click here to register now

An exceptional Mid-Tier, Multi-Service Offering Firm is looking for a candidate to partner with them.

The Person

Preferably you tick some of the following points:

• CAANZ or CPA Qualified
• Minimum of 15 Years of Industry Experience
• With or Without own Fees – May have considered buying one’s own practice
• Current Partner or seeking to become a Partner
• Principal seeking to Merge with a full service offering Practice
• Partner seeking a change with Equity available immediately
• Management skills, tenacity, vision and ability to drive growth

The Offering

• Partnership in a AAA firm
• Fun and inclusive culture
• Ongoing Education support
• Competitive Remuneration
• Equity opportunity
• Purchase terms TBD

The Location

• 🌞 Brisbane CBD based role (A Class office)
• 🌏 Applicants’ location open, although, will need move to Brisbane
• 🏢 Please note: This is an ON-SITE role

If this sounds like you, or you’d like to explore further, please contact us for a discrete, initial, conversation:

Magnus Yoshikawa
M: 0408885944
E: magnus@jadejapartners.com

With all the CHATter about 'AI' we wanted to let you know what your peers have been saying.

• “The ATO will use this opportunity to finally remove the need for Individual Tax Returns”
• “The Computer turned up and we all stood around it wondering what will be left for us to do in the future”
• “Bookkeeping will disappear and so will a lot of the simple work”
• “We see this an opportunity to speed up work and get on with the real work”
• “Maybe this will help us with our staffing problems”

…and the list goes on.

Well, we have seen and heard the fears, excitement and watched the souls that ignore because they don’t have the time to even care but get on with what’s at hand for many decades now.

Change is a constant and is what creates revenue. I note, since taking over from my father, Dip Jadeja (almost 12 years ago), I’ve watched Accountants sweat a myriad of concerns; Going Paperless, Outsourcing, Offshoring, Moving to the Cloud – and look at us now. We’re still here and stronger for it.

The likes of ChatGPT are amazing and intoxicating (not to mention, fun!) but my advice to everyone is to remember the main component of our profession: we are in the ‘relationship (service) business’. We solve our clients’ problems through solutions and, importantly, wisdom. Most firms have been using some form of statistical model-informed automation for at least a decade. The latest AI hype cycle will unearth opportunity yet remains best exploited via tangible solutions.

Sure, embrace the change, because we all end up doing it anyway. Both the naysayers and the ‘blue sky’ dreamers will always catch your ear at the right time or the wrong time. Be sure to investigate, stay educated, watch out for the noise yet get amongst it.

BUT, if you’re temped to imagine that emerging AI solutions will give you an excuse to put your clients at arms length, avoiding the bread-and-butter of ‘face to face’ meetings or regularly checking in via a phone call, rethink that strategy.

Gosh it’s an exciting Industry to be in! Please email us your thoughts and discoveries around AI so we can add it to our list.

Also, If you’d like to talk about what’s happening in the market out there or anything else – let’s talk.

Magnus Yoshikawa

E: magnus@jadejapartners.com

M: 0408885944

“It’s all about the money… I’m out of here!”….I’m tired; I’m at my limit”, “My staff are good but not at Partner level”, “We lack X,Y, Z Skills and Services”… it goes on.

We hear you and understand the struggles of the profession. If you were really wanting to divest or merge the main questions should be ‘where and why’. 

You need to know your target is of the right TRIBE over the offer on the table – no ifs, buts or maybes. 

Is your ‘TRIBE’ a Listed Entity, a mid-tier Firm, 2~4 times the size your revenue, Multi-Partner Firm, or a mirrored version of yourself?

Do they bring the solution you seek: Different skill sets, a new brains trust, an eco-system that seamlessly fits, an evolution for all parties, a greater team?

A view of the tribes by revenue:

Tribe 300k-1.5 Firms probably make up the bulk of our industry with sole practitioners to multi-partner operations. If it’s a small two partner firm, check partner’s billable hours. It might not be what you were envisioning; they may be overly hands on.

Tribe 1.5-5m Firms may have a partner leaving, seek to bring a partner on and hope to break the 5m ceiling they have been trapped at. Look at the age group of the partners and staff as an average. Review revenue quantum per partner.

Tribe 5-10m Firms are a different game plan… if you are joining them, ensure one is aware of all partnership personalities, relations and that this is a very different world and human interaction is getting busier. The spectrum of skill sets should be broad.

Tribe 10-30m Firms are dynamic in themselves and should have multiple levels of management that can help with HR and other areas a sole practitioner or a 2 partner firm normally get bogged down in. These firms generally mirror mid-tier and the ‘BIG 4’.

Tribe 50m Firms + and Listed Entities will have a lot of reporting, profit focused, a management fee but what do you really get with this? Explore this carefully. Interview the partners that have left – they will communicate more openly.

Ensure you always explore the following:

What are your market options?

Time Poor; let’s go to brass tacks:

It’s been a roller-coaster for the last 3 years with COVID and now Inflation is pushing us around… who would have thought finding good staff would be so hard – well, it always has been, it just got harder, more expensive and they don’t even come to the office.

• What am I worth?
• What are the options?
• Will they fix my problems?
• Then what?

Roller-Coaster affected Market valuations are still in premium territory, with $1.20 being the new $1.00, or so a BANK said. But, before you jump onto this thinking, great let’s do it, remember this is a premium and that comes with terms and conditions. We have seen practices sell for more and we have seen some sell for less.

Accounting Practice Buyers – Sample: 

• Individuals leaving larger firms: Quiet
• Small, Medium and Large Practices: Yes
• Market Known Local Consolidators: Yes
• New to Market Consolidators: Yes
• International Consolidators: Yes
• Financial Planning Groups: Quiet

Terms: 

• Sale Price: Negotiated
• Upfront percentage vs Clawback: Negotiated
• Revenue Targets: Negotiated
• Profit Targets: No, be careful here
• WIP & Debtors: Vendor keeps them, unless bought by Purchaser
• Ongoing Role: Negotiated

Time to Settlement after Vendor/Purchaser Introductions: 

• 1 week: Dangerous, slowdown, you’re missing something
• 4 weeks: Curious as to how it is transpiring
• 6-8 weeks: Healthy, review of culture impact
• 12 weeks: The average timeframe
• 6 months: Slow, but this is ok too
• 12 months: Probably doesn’t want to sell

Solutions Sought in Transactions:
Staffing is NUMBER ONE: Don’t just bank on the target’s staff staying

1. Key Staff of Buyer, buying in or becoming Partner: Great focus point
2. Reduction of workload (Buyer or Target): Maybe, although doubtful at start
3. Scalability and efficiencies: it takes 12 to 24 months for healthy momentum
4. Service offering expansion: Gently integrate the cross sell or pushback will appear
5. My problems will all disappear: Sadly, there is no silver bullet – it takes hard work

Now I Have Sold, what’s next: 

• Dream: you should know what you want to do and already be doing it prelisting
• Will they keep me on? – of course, if you want, but not always: Negotiate
• Will I be remunerated the same amount? – no, probably not: Negotiate
• Will I lose control of the business after settlement? Strong possibility: Negotiate
• Can I start up again? Not normally. Strenuous restrictive covenants: Negotiated
• Can I just walk away: Yes, you can negotiated a Walk-In-Walk-Out: Discounted Value

When a buyer comes to the table, tells you everything you want to hear ask yourself:

What don’t I know about this person, this institution and how can I check?

• A GOOD CULTURAL FIT because ‘THEY SAY SO’ – whiteboard it and do it again
• Am I excited over a deal that isn’t true market valuation? Biases give away true value
• What is the ongoing role deemed necessary to ensure full payment of the clawback?
• TERMS: What’s hidden in the terms? What’s hidden in the contract? Question them
• Are they hunting YOU or are you hunting THEM: Strategize Culture, Price, Terms

 To Note: 

• Every deal is a two-way negotiation
• Culture takes time to rise – are you willing to change?
• If it’s about the clients’ future, do a strong reverse Due Diligence
• Be careful about the Buyout and Hang-back targets imposed
• BlueSky dreaming are just bright lights that can lead to disappointment
• In desperation you need to trust someone – Buyers will lowball
• Ask for everyone’s’ experience. Good and Bad

—

Thinking of SELLING in 2023?
Thinking of BUYING in 2023?
Thinking of MERGING in 2023?

Let’s Talk
Magnus Yoshikawa – 0408885944

We will come to your favourite coffee shop; first one is on us!

As we endure 'another' lockdown and the change of normality enshrouds us, the world keeps spinning and Accountants crunch on...

In the first wave of COVID-19 there was a high level of uncertainty, although, the beautiful side of humanity is that we adapt and evolve.

The lockdowns, do create anxiety, throughout the community and the Accounting Industry, from the client base, the networks, the staff, the practitioner and twists back through personal life before it dissipates, and we ‘Pivot’ or adjust to the ‘New Norm’ (current jargon we hear a lot).

It’s tough out there but we survived and can survive, if we want to – we do.

Now into multiple lockdowns, in multiple locations, the question keeps getting posed to us at Jadeja Partners, “Are deals still going on?” and the reply is a resounding, “Yes”, albeit, slightly clunky at times.

And so, because we haven’t said “Hello” since Sydney’s lockdown commenced, we thought, best, to share our COVID-19 ‘Accountancy Industry’ & ‘Transaction Chemistry’ friendly reminders, insights and findings… in less than 2 minutes of your time

1. We are in a Service Industry and we all like the Human element
2. Accounting Practices are all about Human interaction not just the software. Proactive client engagement during uncertain times is on the Practitioner not the client
3. Buyers are still out there in droves. Banks are still keen to transact
4. Prices have not slipped at all, to the contrary, Clawbacks are stable, Clawback timelines are stable and impressively, we are seeing Premiums being paid – it’s a good time to be an Accountant
5. There MUST be a ‘Face to Face’ or ‘Meet and Greet’ meeting between Vendors and Purchasers in person. Skip this and you have a disaster in the making. ‘Human Chemistry’ is the key element
6. You must NEVER buy a practice unsighted. Yes, the numbers tell the story, but the practitioner creates the ‘culture’ and holds the client’s ‘idiosyncrasies’
7. Transactions are taking time with lockdown timeframes being ambiguous which is leading to staggered handover start times – stay flexible
8. Handovers are clunky, even at the best of times. They need to be planned with open communication, documented, agreed upon and executed with precision – it’s not that hard
9. Momentum of Firms are holding client attrition low, although, backlog of workload could hamper this in the future. Do note, Firms are still winning ‘new’ clients
10. Everyone and I mean everyone, is seeking staff – we don’t see this being resolved for at least another 12~24months

Hope this gives you all a little comfort and reassures you of what you already innately know.
As always, the mobile is always on, so “Let’s Talk” – about anything.
Stay safe everyone – looking forward to seeing you all soon!

Magnus Yoshikawa 0408885944

I don’t think anyone really retires, in the sense, they do 'nothing' going forward, but, when / how do Accountants calculate it's time?

I know a lot of us at, peak times / busy times, would like to retire, right then, during those moments or would love the COVID travel restrictions to be lifted so we could get away but in reality those ‘twangs of pain’ pass.

What we are looking at is why the ‘so called’ optimal age to retire is 65… or is it sell… or is it just completely irrelevant?
As part of your strategy sessions whilst you think about, ‘Where to from here?’ , or ‘What is my / our end-game / goal?’ Stay flexible and add these following paragraphs into the discussion:

Selling your accounting firm at 65 means to the buyer you are less risky but the client base is old. The client base average is 10-15 years either side. Yes, that means 50~80 years of age for the client base. I’ll let you guess on which is more lucrative.

But, just in case you thought an older client base wasn’t sellable, think again. The reality of our ageing population means a smart estate planning service might be ‘low-hanging fees’ in the future. with the opportunity to make ways into the next generation.

Selling your Accounting Practice before 65 is optimal for the big players as a risk reduction strategy. They want a longer opportunity with the younger client base. We have seen practitioners as young as 40 turn up and ask for help in divestment. Keep in mind, this generally will trigger stronger, more stringent terms, due to the fear of what may happen in 5 or 10 years time vs the 65yo. The terms may seek for ongoing equity and / or longer payout timeframe of the clawback.

The optimal time to act is always ‘NOW’ (it’s a sellable asset – don’t forget it, work it) with 60 as your reminder alarm clock, 65 as your, time to act fast or join / merge with another crew and pass the baton. And then there is is always the understanding, that, maybe, just maybe, it’s ok not to sell and to just sail on, remaining relevant to you clients and being happy with the decision.

Remembering, stay flexible, seek cultural fit – every opportunity is different and terms are there to be negotiated.

Nothing wrong with working at 80 ! Nothing wrong with planning to sell today. The important point is to know the journey as an accountant, the during and the after. Plan to win, you can.

Let’s Talk + Hello Campaign are still in motion.
Melbourne, we know it’s tough but we will be there soon.

Magnus Yoshikawa 0408885944

Stop wasting time chasing payments and help more clients #rebuild in 2021

We are lucky Australia went into 2021 much healthier than most of the world, but it was still a challenging year and your clients might seek payment flexibility and financing options to #rebuild their business. As the end of the financial year approaches, it would be a good time to discover the fintech options that are out there and see how you can stop wasting time chasing clients for payment.

Our good friends at QuickFee have really brought out the right payment technology to help you out with this.

What if you could offer your clients flexible payment plans, but still get paid in full right away? QuickFee uses a sophisticated technology that splits your invoices into 4 interest-free monthly instalments that your clients can pay over time while you receive full payment within 2 business days. It uses the existing credit available on your clients’ Visa or Mastercard, making it the only risk free, non-recourse payment solution available on the market.

QuickFee Instalments enables you to provide more services and removes the pain of collection at the same time. If you’re thinking of selling your practice or just want to have a great 2021 helping your clients you’ve got to use QuickFee Instalments.

Check them out here!