: Review 3–5 years of Profit & Loss statements, balance sheets, and tax returns.
The goal is to verify that reported income matches actual cash flows and tax filings.
: Identify how much revenue is tied personally to the current owner. If the owner is the primary rainmaker, retention risk increases post-sale. 2. Client Base Analysis buying a cpa firm due diligence
In a CPA firm sale, you are essentially buying a book of business; its "stickiness" is paramount.
CPA & Accounting Practice Due Diligence - Poe Group Advisors : Review 3–5 years of Profit & Loss
Due diligence for a CPA firm acquisition involves verifying that the practice's revenue is sustainable, its client base is transferable, and its operational foundation is stable. A solid due diligence report should evaluate four core pillars: , Client Base , Staffing , and Legal/Regulatory compliance . 1. Financial Performance & Quality of Earnings
: Analyze accounts receivable aging and collection efficiency. High WIP (Work in Progress) or aged debtors can signal poor billing practices. If the owner is the primary rainmaker, retention
: Break down revenue by service line. Recurring fees (e.g., CAS, monthly bookkeeping) typically command higher valuation multiples than one-time tax prep or lumpy audit fees.