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The fear is that the change of ownership itself will cause clients to leave the firm for a competitor or start doing the work themselves. Everyone has a horror story about someone who bought a practice and lost two-thirds of the clients. However, under circumstances involving a reasonable amount of care and common sense, client retention for a new owner often can be close to what would have been experienced by the previous owner! 

The key to a successful operation of an accounting or tax practice is client retention. That is true after the purchase of a practice but, in fact, that is true for any practice. All firm owners must be able to retain clients in order to survive and thrive. In the day-to-day operation of a practice there is no guarantee that clients will keep returning for services. No person owns the clients and therefore no one can force them to stay. In theory, an owner could lose every single client tomorrow! Yet owners typically do not worry too much about it because they realize that clients can be retained successfully for years and decades.   

Who should bear the risk of client retention? In reality, the buyer has almost all of the control over client retention! It is the buyer who makes the decisions regarding quality of services and pricing decisions that affect clients. The seller can assist the buyer with key introductions, endorsement letters, occasional problem solving and words of encouragement. However, the seller's ultimate contribution to the deal is to bring the goodwill of the clients to the closing table, to provide a list of persons with the need for accounting services and to use his or her influence to encourage clients to give the new owner a try. The seller simply owes the buyer loyalty and good faith support. The seller helps with client retention but the bulk of the responsibility, by far, is with the buyer. If the new owner does not treat the clients well and provide fair solutions for them, they will leave no matter what the seller says or does. It really is only the buyer who can make the clients happy two or five years down the road.
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For all of your buying and selling needs, contact APS at www.APS.net or call 800-397-0249.