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Supply, demand patterns for firms creates 'interesting dynamic'

An industry consultant is finding greater demand than there is supply for accounting firms at the moment, and says smaller firms may be better placed to sell externally, bucking a classic trend of finding an internal successor.

M&A Jotham Lian 27 December 2017
— 1 minute read

Planet Consulting founder Rob Pillans said while internal succession continues to be a viable option for larger firms, due to the sheer numbers of professionals moving through the ranks, a lot of the smaller firms are finding it challenging to find anyone with an interest in taking over the business.

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With the current market for accounting firms relatively strong, however, owners of smaller firms who are looking to retire may find more luck selling their business externally instead, said Mr Pillans.

“I’m being told by some of the accounting firm business brokers that there are definitely more people wanting to buy accounting firms than sell,” he said.

“So that’s an interesting dynamic and might mean that some people might be more encouraged in that sort of market to look at an external exit, because there’s a ready market.”

Mayflower director Sarah Penn said this might not last over the long term, however, with a lot of Baby Boomers looking to retire over the next 10 years.

“Everyone’s been talking about generational change and Baby Boomers retiring for ages, but I think we might be actually starting to see it happen,” Ms Penn said.

While this is likely to still be 10 years away, she expects this will lead to an increase in the number of firms being sold.

“I think the combination of Baby Boomers retiring, changes [in the industry] and expectations will accelerate that change,” Ms Penn said.

 

Supply, demand patterns for firms creates 'interesting dynamic'
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Jotham Lian

Jotham Lian

Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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