Some good advice in the responses above.
Our experience in our purchasing a number of small practices is the importance of “cultural” issues. A review of the files may reveal ethical issues (as a copy of the return for the IRS and another, different one, for a bank). If fees are substantially different it will not work. Are the target clients used to working with a CPA or EA where more details (like engagement letters, and organizers) are required.
As far as terms are concerned, we have bought with 20% down with the balance over 3-5 years, no interest, note balance reduced by clients who do not return. We had one where a practioner had not gotten any interest in the sale of his business and we agreed to pay 25% of fees collected from clients who came to us (for year one only).
In our first practice purchase, we lost over 50% of the client base we purchased, because of price and cultural issues. I guess they were scared off because we are a CPA firm.
In any case, expansion is a challenge. Good luck to you.
