Largest Sacramento area Accounting Firm Merger
Roseville-based Gallina LLP announced it’s merger into Minneapolis-based CliftonLarsonAllen LLP. The area’s biggest firm based on the number of local CPAs says it’ll be effective the first of the year.
Gallina has more than 300 employees in 12 offices. Those are in California, Nevada, Utah, and Washington. CliftonLarsonAllen employs over 4,500 professionals, with more than 1,800 certified public accountants in its 100+ locations nationwide. Gallina was founded in Sacramento in 1972 by Sam Gallina. They perform accounting for clients in the construction and building industries, as well as accounting and audit services to other non-publicly traded companies.
“By joining CLA, we have an ability to better serve our clients by bringing them a greater depth of service offerings through more robust resources,” said Larry Taylor, Gallina managing partner, in the news release.
Selling a CPA’s ownership interest
This news brings us to what experts say is a critical part of a CPA succession plan. It’s the sale or transfer of the selling CPA’s ownership interest and the method by which the value of that interest determined. A frequent issue in accounting firm sales concerns the multiple of billings, which is used to determine the sale price. This is determined by four main factors: (1) amount of cash, if any, paid upfront; (2) the retention period length; (3) the deal structure’s profitability for the buyer; and (4) the duration of the payment period.
The multiple is produced by the combination of these factors. For example, the less money that put upfront, the longer the payout and retention periods will be, and the more profitably will be structured for the buyer, meaning a higher multiple. In contrast, if more money is placed upfront, there will be shorter payout and retention periods and a less profitable structure for the buyer, resulting in a lower multiple.
There are other factors that will also impact the sale price of a CPA firm. For instance, higher-quality firms—those with big clients and higher billing rates and realization typically will achieve a higher value. If a CPA is in a market where there are several accounting firms looking to buy CPA practices, the demand for the business will be greater, and the value is higher. With that in mind, there have been several locally based accounting firms that have been acquired in the last few years, with larger regional and national firms seeking to expand into the region. This might be the right time to consider selling your accounting business.
Merger emerging as a dominant trend
According to a recent AICPA Private Companies Practice Section (PCPS) Survey, mergers and acquisitions activity at CPA firms is strong, with half of multi-owner firm leaders stating they have been in active merger discussions over the past 24 months.
Work with an experienced business broker who can help you with an accounting firm sale. Andrew Rogerson is a business expert and has negotiated hundreds of business transactions in cities throughout the Sacramento Region. He’s helped to set up franchises in Cameron Park, Citrus Heights, Rancho Cordova, Folsom, Elk Grove, Roseville, Rocklin, Davis, El Dorado Hills, and throughout the region.
Spend some time talking with professional business broker Andrew Rogerson. He knows about franchises and businesses in the Sacramento area. Please visit our website Services. You can also get in contact with Andrew via email or call him at (916) 570-2674.