How to Sell Your CPA Firm for More and Regret It Less
Summary
Tom opens this episode by flagging one of the most expensive planning gaps he sees among business owners: the assumption that there is always more time to figure out the exit. His guest, Steve DeTray, CEPA and founder of Freedom Path Planning, brings a sharp framework to the conversation built on years of working directly with CPA firm owners who come to him too late, or just in time. They walk through why entrepreneurs, CPAs especially, tend to delay exit planning until it has already cost them, what push and pull factors actually drive most exits, and why 75 percent of business owners who sell end up regretting it within 12 months, not because of the check, but because they never thought through what comes next.
The second half of the conversation gets into the mechanics: the five Ds that force half of all exits to happen involuntarily, the two-to-seven-year runway that separates a solid exit from an expensive one, and what buyers actually look for when they evaluate a CPA firm. Steve and Tom also dig into why price is not the only thing to optimize for, how proactive service offerings change a firm's valuation, and the first assessments every business owner should run before they even think about going to market.
Key Takeaways
* Start exit planning before you think you need to: the minimum effective runway is two years, but five to seven years gives you the best chance at a happy, financially optimized exit.
* Fifty percent of business exits are forced by one of the five Ds: death, divorce, disability, disagreement, or distress. Having a plan in place protects your family and your legacy no matter what.
* Owner dependence is the biggest value killer in a CPA firm: if the relationships leave when you do, buyers will discount or walk away from your business.
* Price isn't the only thing that matters in a sale: employees, community, and what the buyer plans to do with your firm all determine whether you'll look back on the exit with pride or regret.
* A wealth gap analysis is your first move: knowing the gap between what you have saved and what you need from the sale gives you a clear target to plan around.
Links & Resources
* Perennial Pride — perennialpride.com [http://perennialpride.com/]
* Wealth Beyond the Numbers by Tom Suvansri — Available at perennialpride.com [http://perennialpride.com/]
Keywords
Perennial Pride, Perennial Pride Podcast, Tom Suvansri, financial freedom, wealth strategy, proactive financial planning, alternative investing, Wealth Beyond the Numbers, Virtual Family Office, exit planning, CPA firm exit strategy, selling a CPA firm, business exit planning, CPA firm valuation, owner dependence, five Ds business exit, exit planning for business owners, tax strategy for business exit, private equity CPA acquisition, earn-out strategy, Steve DeTray, Freedom Path Planning, Opportunity Lost
Episode Highlights
[00:01:36 - 00:02:37]
Steve explains what drove him to write Opportunity Lost: CPAs repeatedly told him they wished they had known this sooner.
[00:03:00 - 00:04:02]
Steve breaks down why business owners delay exit planning: they get the financial freedom but never build in the time freedom, so the exit stays on the back burner.
[00:05:38 - 00:07:05]
Steve introduces push vs. pull factors: negative pressures like burnout push owners out, while a clear vision of the next chapter pulls them toward a more fulfilling transition.
[00:08:12 - 00:09:55]
A study by the Exit Planning Institute found that 75% of business owners who sold deeply regretted it 12 months later, not because of the price, but because they had no plan for what came next.
[00:11:15 - 00:12:27]
Tom and Steve walk through the five Ds of forced exits: death, divorce, disability, disagreement, and distress, which account for 50% of all business exits.
[00:13:21 - 00:15:03]
Steve shares his own exit: he sold his wealth management practice in three months and left six figures on the table because he had no plan in place.
[00:16:17 - 00:18:12]
The timeline framework: two years is the minimum, five to seven years is ideal, and starting at the beginning of the business is best of all.
[00:18:13 - 00:19:10]
Certain IRS-code strategies can effectively eliminate capital gains taxes on a business sale, but only with at least five years of lead time to set them up.
[00:20:58 - 00:22:09]
Owner dependence is the single biggest value killer in a CPA firm: if the owner holds all the client relationships, buyers see that as unacceptable risk.
[00:22:10 - 00:25:29]
Differentiated, proactive service offerings make clients stickier and the firm more valuable, because 74% of business owners are already open to switching CPAs.
[00:25:30 - 00:27:24]
Selling a business is far more complex than selling a house: Steve's due diligence process includes 150 non-financial questions that most owners cannot fully answer.
[00:32:25 - 00:34:38]
Exit planning is just good business planning: the same setup that makes a firm attractive to a buyer also makes it more enjoyable and sustainable for the owner right now.
[00:36:08 - 00:38:25]
Steve breaks down buyer types, including strategic buyers and private equity, explaining how each buyer's business model should shape deal structure and what the owner prioritizes in the negotiation.
[00:40:52 - 00:42:19]
The first step: run a personal assessment, a business assessment, and a wealth gap analysis to find out where you stand and how much the business needs to sell for.
