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Mergers and acquisitions (M&A) has become a key strategy for many practices looking to grow, stay competitive, and plan for the future. Whether it’s mid-sized firms in the UK or large U.S. firms supported by private investors, mergers and acquisitions are changing the shape of the industry. This trend is being pushed by factors like an ageing workforce, shortage of skilled staff, rising tech expectations, and changing demands from clients.
Accounting firms often talk about mergers and acquisitions as if they mean the same thing, but there are key differences in how each works, both legally and in practice.
A merger happens when two firms decide to come together as equals to create a new, shared business. They usually combine their leadership teams, ownership structures, and even their branding.
In the UK, FRS 102 allows “merger accounting” in certain cases, usually when both firms have similar owners and assets are transferred without being revalued. In these cases, a “merger reserve” is created in the books, but it doesn’t show up in the profit and loss account. [5]
Mergers are often seen as partnerships, not takeovers. They suggest fairness and teamwork, where no single firm is in charge of the other.
An acquisition is when one firm buys another, either by purchasing its shares or its assets. The buyer takes full control of other firm’s operations, people, and clients.
In accounting terms, this is called the “purchase method.” The acquiring firm values what it’s bought at market prices and adds things like goodwill or intangible assets to its own balance sheet. [6]
In most cases, the firm that’s been bought is absorbed into the buyer’s business. However, sometimes the sellers stay involved for a while maybe keeping a small share or earning more later if targets are met (this is called an earn-out deal).
Area | Merger | Acquisition |
---|---|---|
Legal setup | A new or joint company is formed | One firm buys the other outright through shares or assets |
Accounting | Uses merger accounting under FRS 102 | Uses purchase accounting, includes goodwill on the balance sheet |
There are big differences when it comes to tax, compliance, and reporting. Merger accounting is simpler in some ways but only allowed under strict rules. Acquisitions need proper valuations, thorough checks, and careful handling of any hidden risks.
On the cultural side, mergers are about blending two ways of working. Acquisitions, however, often mean one firm’s culture takes over. That can lead to challenges if not managed well. [7] [8]
Most importantly, how you present the deal makes a real difference to how staff and clients react. A well-handled message can protect trust and loyalty during times of change.
Choosing between a merger and an acquisition is a major decision for any accountancy firm. It’s not just about numbers, it’s about leadership, culture, vision, and the future of your business. The best option depends on what you’re aiming for and how well your firm can handle the change. Here’s a practical guide to help you decide.
Choose a merger if:
Choose acquisition if:
Financial strength
Strategic goals
Cultural and leadership fit
Key Legal and Operational Points
Quick Comparison
Factor | Merger | Acquisition |
---|---|---|
Leadership | Shared governance | Full control by the buying firm |
Cultural fit | Essential | Less important – buyer’s culture often dominates |
Financial cost | Shared outlay | Larger upfront investment |
Legal/admin impact | Joint filings, shared risk | Buyer responsible for integration and adjustments |
Client messaging | “Two firms becoming one” | “You’ll keep getting the same great service” |
Whichever path you pick, don’t skip the groundwork. Do your due diligence, involve your leadership team early, make sure you meet regulatory requirements, and have a clear plan for communicating with clients and staff at every stage.
Mergers and acquisitions (M&A) can help accountancy firms grow faster than ever but they also come with their fair share of challenges. Here’s a simple breakdown of the good and the not-so-good sides of M&A, along with practical tips to manage the risks. [12]
What You Gain | What Could Go Wrong |
---|---|
Faster growth, stronger tech, bigger team | Culture mismatch can cause conflict and delays |
Lower running costs and smarter tech use | Clients may leave if not properly informed |
Access to talent you don’t currently have | Integration can be costly and time-consuming |
M&A can offer accountancy firms a fast track to more clients, new services, and a stronger position in the market. But it’s not without risk. Cultural misalignment, client loss, and integration struggles are real hurdles. The best results come when firms take the time to plan properly, communicate clearly, and carry out careful checks before and after the deal.
Finding the right firm to merge with or acquire isn’t just about luck, it takes planning, networking, and a bit of strategy. Successful firms don’t rely on just one method, they explore different channels to find the perfect fit. Here’s how many leading accountancy firms go about it:
Professional brokers often approved by bodies like ACCA or ICAEW help match firms, guide deal structures, and handle sensitive talks. With so much interest from private equity in the accountancy world, the market is very active right now. Brokers such as Ashley-Kincaid usually focus on larger practices (those earning over US $1.5 million a year), offering access to deals that aren’t always advertised and helping keep talks confidential. [13] [14] [15]
Being part of professional groups like the ICAEW Corporate Finance Faculty or platforms like PracticeWeb, Xero, and QuickBooks can open doors. These networks host M&A-focused events, deal boards, and peer meet-ups. ICAEW alone links around 10,000 professionals through its Corporate Finance Faculty, making it a great place to spot opportunities and make trusted connections. [16]
Sometimes, the best results come from simply contacting firms that fit your goals especially those with retiring partners or similar services. This hands-on approach can lead to better matches, especially if you already know the kind of culture and structure you’re looking for.
Software providers like Xero, QuickBooks, and Karbon now run platforms where firms can find or list acquisition opportunities. For example, Karbon’s marketplace connects buyers and sellers while focusing on tech compatibility, helping ensure both sides use similar systems and workflows, which makes merging smoother. [17]
When reviewing potential firms, keep these factors in mind:
Finding the right firm to buy or merge with takes more than just looking around, it involves using trusted networks, being proactive, and having a clear picture of what you want. Firms that use several routes from industry events and advisors to digital platforms often find better cultural and strategic fits, making the deal smoother and more successful in the long run.
Finding the right way to fund a merger or acquisition is crucial to making the deal go smoothly. Luckily, there are several practical options available, depending on the size of the deal and your financial goals. Here’s a breakdown of the most common ways firms are funding M&A deals today.
If your firm has healthy cash reserves or strong working capital, using your own funds is often the quickest and simplest option.
Many accountancy-focused banks now offer specialist loans for M&A, such as term loans or asset-based lending. [18]
This option involves paying part of the deal amount later usually over 1 to 3 years based on performance targets like revenue, profit, or client retention. [19]
Private equity (PE) firms are showing growing interest in the accountancy sector offering anything from £1 million to over £1 billion in funding. [20]
Sometimes, the seller agrees to be paid in stages, often with interest. This is useful when external borrowing isn’t an option.
No matter how you fund it, be sure to understand the risks and plan ahead especially when it comes to staff, clients, and cash flow. The best deals work when both sides feel secure, supported, and aligned for the future.
Getting your firm ready before a merger or acquisition is just as important as the deal itself. Firms that plan ahead and sort out internal matters early tend to complete deals faster and with fewer bumps along the way. Here’s how to prepare from the inside out:
Before jumping into talks, work out exactly why you’re pursuing an M&A. Are you trying to grow quicker? Bring in new talent? Enter a different market? Or is it part of a succession plan? [21]
Firms that know their goals like replacing retiring partners or adding advisory services have a much better chance of sealing successful deals.
Try using SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound) to shape your thinking. For example:
It’s never too early to speak to legal, financial, and tax experts. They’ll help make sure you’re covering all bases:
M&A isn’t done when the papers are signed. A lot of the real work starts afterwards, getting teams, systems, and services working as one.
Start mapping your integration plan early. It should cover:
Before approaching anyone, get your own operations in shape: [22]
Before the deal happens, test how ready your firm really is:
Treating internal preparation as a core part of your M&A strategy not just a last-minute checklist, gives your firm the best chance at a smooth transaction and a stronger future.
Reaching out to a firm you’d like to merge with or buy isn’t just about making an offer, it’s about building trust from the very first conversation. How you approach this stage can shape the entire deal. Here’s how successful firms handle it with care:
Before any detailed talks, put a confidentiality agreement (also known as an NDA) in place. This protects both sides and shows you’re serious. [23] [24]
Your first conversation shouldn’t be about profit or client lists. Start with the bigger picture, what are you trying to achieve, and how could working together make sense?
Talk about things like:
Firms that focus on shared values and long-term goals in the early stages are more likely to close successful deals than those who lead with numbers.
It’s tempting to dive into the numbers straight away but it’s better to share sensitive information step by step. This gives time to build trust while keeping your firm protected. [25]
The first approach isn’t about deals, it’s about relationships. When you lead with professionalism, protect both sides, and focus on shared values, you set the stage for a smoother deal, stronger trust, and faster progress down the line.
Due diligence is the backbone of any successful merger or acquisition. When firms skip over the details or rush this part, deals often fall apart. In fact, industry data shows that over 80% of M&A deals stall because proper checks weren’t done. On the flip side, buyers who take their time and do thorough groundwork tend to avoid nasty surprises and usually get better value. [26]
Start by looking at the past 3 to 5 years of financial records things like profit & loss statements, balance sheets, cash flow reports, debts, unpaid invoices, and reserves.
Look closely at:
Also, don’t forget:
People are often the most valuable part of an accountancy firm, so take a good look at:
It’s also a good idea to get a feel for the company culture early on. If the working styles or values don’t match, things can get rocky post-deal.
Make sure you know what tech the firm uses this includes accounting software (like Xero or QuickBooks), practice management tools (Karbon, CRM), client portals, and backups.
Check:
Doing this early makes it easier to merge your systems later.
A structured approach to due diligence, split into two clear stages helps uncover any issues early, confirm the true value of the firm, and prevent problems after the deal is done. When done right, the entire process usually takes around 2 to 4 months and sets the stage for a smooth and successful transition.
Getting the valuation right and choosing the right deal structure can make or break a merger or acquisition. Whether you’re buying or selling an accountancy practice, here’s a straightforward guide to help you navigate this key part of the process.
1. GRF Multiples (Gross Recurring Fees) [29] [30]
This is one of the most common ways to value small-to-mid-sized practices.
2. EBITDA Multiples (Earnings Before Interest, Tax, etc.) [31]
Larger firms with stronger cash flow are often valued this way.
3. SDE or Revenue Multiples (for smaller firms) [32]
Smaller, owner-managed practices are often valued on Seller’s Discretionary Earnings (SDE) or straight revenue multiples.
Share Purchase Agreement (SPA)
Asset Purchase Agreement (APA)
Deferred Payments / Instalments [35] [36]
Earn-Outs
Negotiating a merger or acquisition isn’t just about numbers it’s about understanding people, building trust, and getting the details right. Whether you’re buying or selling, the way you handle negotiations can make all the difference. Here’s a step-by-step guide to doing it properly:
Before you even talk numbers, find out what’s driving the seller. Are they retiring? Burnt out? Looking for a better cultural fit or financial reward? [37] [38]
Each of these motivations will affect how they approach the deal.
Ask thoughtful, open-ended questions early on:
“What’s your ideal outcome after the sale?”
“What do you want to avoid?”
“What would a successful deal look like for you?”
Understanding their reasons can help you shape an offer they’ll want to accept and avoid deal breakers later on.
Start by talking big-picture:
Set these expectations before diving into the numbers. It creates a foundation of trust and gives you both room to shape the deal creatively.
It also helps to keep emotions in check. Deals can get tense especially when one side feels uncertain or undervalued. A neutral advisor or broker can help steer the conversation and keep things constructive.
Once you’ve agreed on the main points, put them in writing through a Heads of Terms (HoT). This document outlines: [39]
The HoT isn’t legally binding, but it sets a clear direction and avoids confusion later on.
After that, you’ll need to draft a Sale and Purchase Agreement (SPA) or Asset Purchase Agreement (APA) – this is the legal contract that finalises everything. It should cover:
Private equity deals often come with longer agreements (sometimes 50+ pages), especially if the seller is staying on in some role.
Step | What to Do |
---|---|
1 | Understand the seller’s reasons for selling |
2 | Set clear expectations – about staff, strategy, and culture |
3 | Involve professionals – advisors or brokers can add huge value |
4 | Draft a Heads of Terms to get things on paper early |
5 | Finalise the SPA or APA with legal guidance |
6 | Double-check legal, operational, and tax alignment before signing |
A successful acquisition depends on how well you bring everything together: clients, staff, systems, and performance. Here’s a practical guide to help you get it right:
Client relationships are the heart of any accounting firm so communication is key.
Start with joint announcements: co-signed emails or letters, welcome messages on your website, or even short online events can help clients feel reassured and informed.
Next, arrange personal introductions: when possible, have both the old and new firm leaders meet with top clients. A warm handover builds trust and shows continuity.
Why it matters: Most client loss happens because of confusion or silence. Clear, joint communication avoids that.
People make the firm work so they need clarity and support.
Tip: Firms that focus on culture early on often see higher morale, quicker team bonding, and less staff turnover.
Merging two firms often means merging different tools, too.
Why it matters: Smooth tech integration avoids downtime, errors, and frustration and helps the team settle into their new rhythm faster.
Track the right metrics to see how well the integration is going.
Some useful ones to monitor:
Review progress monthly for at least the first year. Keep checking in, adjusting, and offering support where needed.
Phase | What to Focus On |
---|---|
Before the deal | Plan messaging and choose tech systems |
First 30 days | Introduce clients, assign staff roles, begin tech setup |
Months 1–3 | Run cultural sessions, unify workflows, start measuring KPIs |
Months 3–6 | Check system use, address staff/client concerns, refine processes |
Months 6–12 | Hold review meetings, plan next steps for growth and cross-selling |
Handled thoughtfully, an acquisition can do more than grow your firm, it can make it stronger, smarter, and more resilient.
Mergers in the accounting world don’t succeed just because contracts are signed. The real success comes from how well the two firms combine leadership, ownership, branding, and client care. Here’s how well-prepared firms get it right:
Leadership must be shared clearly and fairly. Around 45% of mid-sized accounting mergers use joint leadership setups like co-managing partners or a shared steering committee to balance control and keep things running smoothly. [40]
Ownership shares should reflect what each firm brings to the table, clients, staff, systems, or capital.
Make sure all partner rights, exit options, and vesting timelines are properly written into legal agreements. This avoids arguments later and helps everyone plan their future.
Branding matters more than many expect. Over 30% of merged firms choose a blended or hyphenated name, it keeps old brand recognition while showing unity. [41]
Before making branding decisions:
Clients need reassurance that their service won’t suffer. Early, clear communication is key.
Stage | What to Do |
---|---|
At announcement | Share leadership plans, ownership structure, and support details |
First 30 days | Launch joint branding, meet key clients, and start team-building sessions |
Months 1–6 | Review client feedback, assess leadership effectiveness, and tweak branding or operations if needed |
Mergers aren’t just business decisions, they’re about people, trust, and identity. When firms put time into transparent leadership, fair ownership terms, a smart branding plan, and thoughtful client communication, the result isn’t just a bigger firm, it’s a stronger one.
A merger or acquisition works best when both sides blend their cultures into one united, motivated team. Firms that focus on communication, values, and team-building from the start tend to keep more staff, boost morale, and get better long-term results.
Before trying to bring teams together, it helps to understand how each one works. What do they value most – client service, innovation, precision, teamwork?
Use simple tools like staff surveys, open discussions, or culture-mapping exercises to spot where you’re similar and where you’re not. It could be how decisions are made, how flexible working is, or how client service is delivered.
By highlighting shared values early on, you avoid misunderstandings later and build a stronger foundation for working together. [42]
Don’t keep the two firms separate after the deal. Instead, create joint teams for things like HR, branding, tech, or client service. Let staff from both sides co-lead projects so they get used to working together as equals.
This mix helps people learn from each other and builds trust. Firms that do this often see quicker integration and fewer people leaving after the merger. [43]
Regular communication is key. Don’t just send one email at the start and hope everyone gets on board.
Plan regular updates through team meetings, newsletters, or casual check-ins. Let people know what’s changing, what’s staying the same, and how they fit into the bigger picture.
Create space for staff to ask questions and share worries. The more open and honest the conversation, the smoother the transition. [44] [45]
Bring everyone together for shared training not just on new software or systems, but on how the new firm will work.
Run workshops on values, processes, and tools. Whether it’s learning how to use QuickBooks or aligning client service styles, learning side-by-side creates a sense of team spirit.
Firms that hold a few of these sessions in the first few months see better cooperation and stronger relationships across teams.
Blending two firms successfully takes more than good spreadsheets and contracts, it takes empathy, teamwork, and shared purpose. When you bring people together the right way, you don’t just merge businesses you build a stronger one.
Turning a merger into a smooth-running operation takes more than just signing paperwork.
It’s about syncing systems, aligning teams, and keeping everything running like clockwork. When done well, operational integration turns two firms into one stronger, more efficient business.
Using different systems in one firm can cause delays, errors, and confusion. That’s why many merged firms move to a single platform like Xero, QuickBooks, Karbon, BrightManager, or CCH iFirm.
Moving everything over might sound daunting, but most modern tools now have built-in migration support. For example, QuickBooks and Xero offer fast and easy transfers, sometimes completed within a day or two. Once on the same system, teams work faster and with fewer mistakes. [46]
Using the same engagement letters, pricing structures, and service terms across the board helps keep things fair, clear, and compliant.
Most practice management tools let you automate these processes from client onboarding and billing to document checks. That means less admin work and more time for staff to focus on client service and advice. [47]
Instead of having separate admin teams running different ways, build one strong support team for the whole firm. This group can manage key tasks like risk checks, deadlines, billing, and reporting.
Tools like CCH iFirm help pull everything together into one dashboard giving partners a clear view of what’s happening, who’s doing what, and where the risks are. [48]
Integration doesn’t happen by itself. Appoint a project lead or integration manager who can stay on top of timelines, support the team, and fix issues before they cause problems.
This person (or team) makes sure everyone’s pulling in the same direction, deadlines are met, and people have the help they need to get used to new tools and processes.
It’s important to check if things are working. Track things like:
Many software platforms now come with live dashboards that help you monitor all this in real time and make adjustments as needed.
Merging two firms isn’t just about growth, it’s about doing it the right way. By uniting systems, streamlining how you work, and supporting your team through the change, you turn a complex merger into a strong and stable foundation for the future.
Getting the legal side right after a merger or acquisition isn’t just a box to tick it’s essential to protect your firm’s reputation, your people, your clients, and your future.
Here’s a clear and practical guide to making sure everything stays compliant after the deal is done.
If your firm is regulated by ICAEW, ACCA, or a similar professional body, you’ll need to let them know about the merger or change in structure ideally before it’s completed.
Most regulated firms send updated registration forms within 10 working days after the deal to keep their audit status and licences in place. ICAEW, for instance, can take up to 12 weeks to process changes, so the earlier you start, the smoother the process. [49]
When teams move across to the new firm, TUPE (Transfer of Undertakings Protection of Employment) regulations apply. These rules protect employees’ existing terms and conditions.
Make sure all affected staff are properly informed and understand how their roles, rights, and benefits will continue after the transition. TUPE also supports legal data sharing between the firms, helping you stay GDPR compliant. [50]
Any personal or client data being transferred as part of the deal needs careful handling under GDPR.
Use secure virtual data rooms (VDRs) rather than copying or downloading large chunks of data. Only move what’s essential, and make sure everyone affected – clients, staff, suppliers is kept in the loop.
Getting this wrong could lead to heavy fines and reputational damage, not to mention legal responsibility falling on the acquiring firm.
The Information Commissioner’s Office (ICO) provides a helpful checklist make sure you’ve got a lawful reason for processing the data, clear communication, and strong data security in place. [51] [52]
Go through all existing agreements, client contracts, office leases, supplier deals, insurance cover, and professional licences. Make sure nothing slips through the cracks.
Confirm that your indemnity insurance, cyber cover, and other policies will extend to the merged entity. Note that some licences don’t transfer automatically, so they may need to be updated or reapplied for under the new business structure.
Area | What to Do |
---|---|
Regulatory Bodies | Notify ICAEW/ACCA within 10 days, allow up to 12 weeks for changes |
Staff Transfers (TUPE) | Inform employees early, protect their roles and terms |
Data Protection (GDPR) | Transfer data securely, document your legal basis, notify those affected |
Contracts & Licences | Review all agreements, check insurance and licences cover the new setup |
Post-deal compliance isn’t glamorous, but it’s vital. By planning ahead, filing the right forms, handling data with care, supporting staff, and reviewing your legal documents, you’ll protect your firm and keep everything running smoothly.
Mergers and acquisitions in the accounting world aren’t just about signing contracts, they demand careful planning and a clear understanding of what not to do.
In fact, research shows that about 80% of failed deals in this sector had the same avoidable issues. Here’s how to stay on the right track:
Skipping proper checks is one of the biggest mistakes firms make. Hidden debts, dodgy numbers, or poor internal systems can all come back to bite you.
Big-name failures like the HP–Autonomy deal (which ended in an $8.8 billion write-down) show just how costly this can be. Always take the time, usually 6 to 16 weeks for a full and phased due diligence process. [53]
Even if the numbers stack up, clashing values or work styles can derail everything. Around half of all accounting firm mergers struggle because the teams simply don’t gel whether it’s due to personality clashes, leadership ego, or completely different ways of working.
If you don’t keep people in the loop, they’ll make their own assumptions and that’s rarely good. Silence creates confusion, anxiety, and in many cases, the loss of key staff or clients.
Start clear and open communication before the deal is signed, and keep it going for at least a year after.
Thinking of M&A as a quick transaction, rather than a long-term change, is another common error. Without a detailed plan to merge systems, teams, and processes, things can fall apart fast.
Firms that go in with joint project managers, shared workflows, and a clear plan often see smoother transitions and less staff turnover, some even speed up success by 20–30%.
Some deals fail even after getting a ‘good price’ because they weren’t built around a shared purpose. M&A should be seen as a bigger transformation, not just a way to gain new clients or upgrade software.
If both sides don’t agree on the long-term vision, even the most well-structured deal can fall apart once the paperwork’s done.
Avoiding these common traps like rushed checks, clashing cultures, lack of communication, weak planning, or a short-term mindset can make all the difference.
Done right, a merger or acquisition isn’t just about growth on paper. It’s about creating something stronger, smarter, and ready for the future.
Mergers and acquisitions can be powerful tools for accounting firms seeking growth, scale, or succession. The key is strategic alignment, cultural fit, and rigorous execution. Whether merging with a peer or acquiring a retiring firm, success depends on planning ahead, communicating clearly, and managing integration professionally.
Neha Jain is a skilled content writer with a rich background in business and financial knowledge. With a bachelor’s degree in English Literature and Psychology, Neha has honed her writing skills, furthering her expertise with the Content Writing Master Course (CWMC) at IIM SKILLS and a Content Marketing Certification from HubSpot Academy.
Working alongside our business development experts, Neha specialises in helping accountants, dentists and other healthcare professionals start, scale and sell their businesses.
Samera Founder & CEO
Arun, founder and CEO of Samera, is an experienced accountant and dental practice owner. He specialises in accountancy, building businesses, financial directorship, squat practices and practice management.
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