Accounting Practice Sale and Purchase Agreement

What a good one includes

• A precise definition of the transferred assets, specifying whether the sale includes the brand name, physical office equipment, software licenses, or strictly the client roster.
• A detailed payment structure that outlines the down payment, installment schedules, and any earn-out provisions tied to client retention rates over the first year.
• A structured transition plan detailing the seller’s commitment to assisting with client introductions, onboarding, and handover meetings for a specified timeframe.
• Enforceable non-compete and non-solicitation covenants that prevent the seller from opening a competing practice or poaching former clients within a defined geographic radius.
• Clear allocations of liability for historical work, identifying who is responsible for past tax preparation errors or disputes arising from prior tax years.
• Specific protocols for transferring sensitive client financial data and physical records in strict compliance with professional privacy regulations.

Common mistakes to avoid

• Failing to tie the final purchase price to actual client retention, which often leads to paying full price for clients who leave immediately after the transition.
• Omitting a clear protocol for handling work-in-progress, leaving both parties to argue over who bills for tax returns started by the seller but finished by the buyer.
• Neglecting to define the exact scope of the seller's post-closing transition support, resulting in either a sudden abandonment or an overbearing former owner interfering with operations.
• Ignoring local state board of accountancy rules regarding the transfer of CPA firm ownership and client consent requirements for record sharing.

Frequently asked questions