Let's start with the Objective -- Merge and Grow Big.
Then, Let’s continue with the "Why Not" …
Why mergers fail?
· Ego or the unwillingness of partners to adapt to new changes
· A poorly though out and communicated firm name
· Introduction of change too quickly can scare off staff and clients.
· Failing to have a succession plan, particularly for exiting partners
· Don’t have proper transition for staff
· Failure to integrate technology
· Impatience
But does that deter us to stop thinking about Merge & Grow ? No… So,
Why merge?
Based on statistics from MIA, more than 90% of accounting firms in Malaysia are sole proprietor practices. [June 2008, Accountants Today]
For non-audit firm, in year 2014. [won't be much different in 2020 or 20221]
· Key benefits
o Transition from Accounting to Advisory
o Capacity and competency to serve niche market
o Diversity of experiences from Partners to complement each other
o Career path for the staff / employees [Staff Retention]
o To enable both parties to tapping into wider market
>> Provision of Academy
>> Wealth Advisory
>> High-Value General Advisory
>> HR Consulting
>> IT Consulting
· Long term benefit
o Exit plan – be able to sell the "enlarged" practice at superb good price, must be an attractive brand at investment grade’s size.
· Small benefits
o Fill up empty office space?
o Spread technology costs?
o Utilise excess staff?
o Share Branding budge?
When to merge?
· Intended to grow fast
· Losing business opportunity due to current size or limitation.
· Losing clients or staff?
More issue to be considered....
How to value the firm?
· Billing
· Profit
· Weighted Average of Billing and Profit
Management and Driver of Grow
· Ownership
o Who to drive it?
o Control vs Ownership?
· Profit allocation
o Salary
o Profit sharing
Keen to merge?
Contact us Hello@CnpsAssociates.com or
P/s -- If Chong Accounting can't find candidate to merge, may be can be the intermediary for other firms to merge.
For Reading
What is your firm worth?
More information in MIA's website https://www.mia.org.my
Home / Professional Practices and Technical https://www.mia.org.my/v2/downloads/smp/roadmap/events/2016/06/02/merger/speakers/Coverage%20of%20Key%20Issues%20&%20Action%20Required%20by%20Dato'%20Jasani.pdf
Below are the documents available in MIA website, uploaded here for quick and easy reference.