There's a moment in almost every CPA firm acquisition when things start to feel real.
The buyer is interested. The valuation looks reasonable. The letter of intent (LOI) is signed. There's even a proposed closing date on the calendar.
For a seller who may have spent decades building their accounting practice, it's an exciting milestone.
But here's something we've learned from working on CPA acquisitions: a signed LOI and a completed sale are two very different things.
And sometimes, the distance between them is much greater than anyone anticipated.
An LOI Is Not a Guarantee of Closing
A letter of intent is an important step in an acquisition. It outlines the proposed purchase price, deal structure, timelines and conditions that both parties intend to work toward.
But the principal purchase terms are generally non-binding. The buyer may still need to complete due diligence, secure financing, obtain internal approvals or negotiate a definitive purchase agreement.
Certain provisions, particularly confidentiality and exclusivity, may be binding, depending on how the LOI is drafted. That's why having experienced legal counsel review the document matters.
What we observed is how quickly an LOI can create a sense of certainty for sellers. They begin planning their exit, gathering documents and making time for the buyer's requests.
Yet the transaction itself may still be far from guaranteed.
When Due Diligence Becomes a Full-Time Job
We've been involved in situations where sellers have worked evenings and weekends preparing financial statements, organizing records and responding to extensive due diligence requests.
These aren't owners with unlimited time on their hands. They're still running accounting practices, managing staff, serving clients and keeping the business moving.
Then, after weeks of effort the deal takes an unexpected turn.
Sometimes the buyer changes direction. Sometimes the proposed acquisition no longer fits their strategy. And sometimes, despite an agreed timeline, the financing simply isn't ready.
We've encountered this particularly in larger transactions, including deals valued at approximately $4 million and above, where financing structures and approval processes can become more complicated.
Imagine preparing everything for a proposed 30-day closing, only to discover halfway through that the buyer still needs several weeks to secure funding. Not every delayed transaction is a bad transaction. Due diligence exists for a reason, and legitimate issues sometimes emerge.
But there's a difference between discovering something unexpected about the business and discovering that the buyer wasn't financially prepared to complete the purchase in the first place.
Sellers Should Be Doing Due Diligence on Buyers, Too.
Buyers routinely ask sellers for financial statements, tax returns, revenue breakdowns, employee information and client concentration reports.
That's understandable. They're considering a significant investment.
But shouldn't sellers be asking a few questions of their own?
One of the most important is also one of the most uncomfortable: Can the buyer actually finance the acquisition?
It's especially awkward when the buyer is a large, established or well-known organization. Asking for proof of funds can feel unnecessary or even a little confrontational.
But a recognizable name isn't the same as committed acquisition financing.
A buyer may be relying on existing cash, bank financing, outside investors or some combination of all three. Understanding that structure early can save everyone considerable time. We're not suggesting that every buyer needs to produce a bank statement showing the entire purchase price in cash.
Instead, a seller should understand where the money is expected to come from, what financing or approvals are already in place and what remains outstanding.
Depending on the transaction, that may include a bank confirmation, evidence of available capital, an indicative financing letter or documentation of investor commitments.
And if a buyer proposes closing in 30 days, it's entirely reasonable to ask what needs to happen between now and then to make that possible.
These conversations are much easier before weeks of due diligence have taken place.
A Little Preparation Can Save Sellers a Lot of Time
There's another part of the process we think sellers can make considerably easier on themselves.
Having a basic due diligence data room prepared before a serious buyer comes along.
A well-organized, secure folder containing historical financial statements, tax filings, current-year results, staffing information, service-line revenue, key agreements and anonymized client concentration data can make an enormous difference.
It also means a seller isn't constantly pulling themselves away from client work to answer requests that could have been anticipated months earlier.
Of course, CPA practices hold highly sensitive client information. Preparing a data room doesn't mean giving every interested buyer unrestricted access to confidential records.
Information should be disclosed in stages, with appropriate confidentiality agreements, access controls and compliance with applicable professional and privacy obligations.
The goal is simply to be organized before the pressure begins.
For owners still considering their options, we've previously written about the questions CPA firm owners ask before they're ready to sell and what happens when an accounting practice is listed for sale.
Both conversations ultimately come back to the same point: preparation gives sellers more control over the process.
An LOI Is a Starting Point, Not the Finish Line
None of this is about making buyers jump through unnecessary hoops.
Good buyers appreciate an organized seller. Good sellers should be able to expect the same level of preparation in return.
The best transactions are built on realistic expectations, clear communication and an understanding of what both sides need to do to reach closing.
At RSSL Mergers, we believe that starts well before anyone signs a letter of intent.
Because for a CPA firm owner who has spent 20 or 30 years building a business, the goal is to find a buyer who can actually close.
If you're considering selling your CPA practice, RSSL Mergers works with owners to evaluate buyer interest, navigate acquisition discussions and prepare for the next stage of their business.
