The average medium size accounting or CPA practice will sell in around 3 to 6 months. The definition of medium size is under $500,000 in annual revenues. For larger practices, this timeframe is longer and typically a little less than a year.
Why so long:
Asking Price & Terms: This one is fairly obvious, but an overpriced practice will be on the market as long as it remains overpriced. Once the price comes down to perceived market value from the buyer, then negations and interest will pick up.
Buyer’s Due Diligence: Generally this is about a week or so process and only after the buyer and seller have agreed to price and terms. This is where the buyer will be able to examine the records and verify the information more thoroughly.
Bank Financing: If the buyer is seeking financing for the practice acquisition, this can extend the buying period to upwards of 4 to 6 weeks. Some conventional lenders may take less but SBA loans will be at least this long. There will be additional information and paperwork that will be required from both the seller and buyer. This information must be routed to the lender in order to meet the SBA loan qualifications and receive a loan commitment.
Attorneys: Both buyer and seller can initially agree to price, terms and other conditions in the beginning but working on the final purchase agreement will take some time. It will take the attorneys time in order to complete the draft purchase agreement. The draft agreement is generally prepared by the buyer and presented to the seller. The seller will then take this agreement to their attorney for review. Once the agreement is acceptable to both sides; an actual and physical closing date can be set.