Choosing Your Transition Accountant
April 29, 2021
Choosing Your Transition Accountant – Part four of a Five-Part Series
In most of the transactions we have been involved with, the question of selecting an accountant for the transition team has been largely moot: most pharmacists will use their regular, long-time accountant. It makes a certain sense. After all, why reinvent the wheel? Hopefully, your current accountant knows your business and knows you; those are important considerations. However, to be frank, using your regular accountant during the sale of your business can be a mixed blessing. Yes, familiarity with your business is good, but the process of selling that business puts many accountants into unfamiliar territory. It is just not something many of them do every day.
We are realists, however. You are likely to want to keep your current accountant on the transition team. But we would suggest that, at the very least, the beginning of the sale process is a perfect time to review your accountant’s capabilities and resolve any concerns you might have.
Do you have the best person for the job?
For instance, we would assume that if they have been helping you for a long time, you think their practices and depth of knowledge are sound. But maybe – just maybe – you have some doubts. Maybe you have not raised those concerns because, well, they never seemed that important. Now they are, or very well could be. So talk about it with your accountant, and if they cannot or will not address and resolve them, look elsewhere. The same advice applies to the question of how well they understand your business and its corporate structure. Sure, they do your annuals and file your tax returns, but how engaged are they? Any doubts? Resolve them or move on.
Another important question to ask and get answered is whether your regular accountant has the time and the willingness to be more readily available to you than they might be used to. Through the routine course of your business, you might interact with your accountant a handful of times in a year, but the sale process requires a lot of time and work, and you will need answers from your accountant quickly. Can they handle it? Ask them, and make sure you are satisfied with the answer.
The skills you should be focusing on
Finally, there is the important question of tax knowledge. Not all accountants are the same, and while all public accountants prepare year-end statements and file tax returns, not all have the depth of training and experience needed to understand the tax implications of selling your business. It will be (hopefully) the single biggest liquidity event of your lifetime, but we have seen many sellers disappointed – or their retirement plans derailed – by a huge tax bill that might have been mitigated with the advice of an expert tax accountant.
If you are sure you want to work with your regular accountant and they are not a tax specialist, then here is our suggestion: At least two years before you begin the sale process, have your accountant consult a specialized tax advisor to review your business and provide guidance on ways to reduce frictional tax costs from your sale. They should look not only at your corporate structure but also at the amount of money or investments you have in the company, among many other things. Without that specialized analysis and advice, you could find that even the most well-designed tax plan can go awry.
Next up: Choosing your financial advisor.
Read the other articles from the series:
Part 1 – Assembling Your Transaction Team
Part 2 – Choosing Your Transaction Advisor
Part 3 – Choosing Your Transaction Lawyer
Max Beairsto, B.Sc. Pharm., MBA, CVA is an intermediary and valuation analyst with EVCOR (Enterprise Valuators Corporation), a Canadian business advisory firm that focuses on valuations and the sale of healthcare-related companies.
Coming to Market:
Western Canada
Max Beairsto, BSc., MBA, CVA
max@evcor.com
www.EVCOR.com
1-844-283-6367 ext 101
Dan Reich, PharmD.
dan@evcor.com
www.EVCOR.com
1-844-283-6367 ext 106
Eastern Canada
Ray Becher
ray@evcor.com
www.EVCOR.com
1-844-283-6367 ext 113
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