Buying a Tax Prep Business

[Deleted]

I was approached by an acquaintance that is looking to sell his tax preparation business (about 200 long term clients). No assets to speak of other than his client list and a three year old computer with previous years preparation programs. Neither of us has been involved in buying/selling a business and were wondering how these deals are usually structured. We were thinking of the seller receiving a percentage of his former client’s fees over the next three years. Before I begin negotiations I was wondering if there is a customary or usual percentage used in this type of transaction. Is there anything else that should be included in the agreement or that I should look out for?
Thanks.

[mwcpa]

in an accounting firm the deal is anywhere from 100% - 125% of "retained" business paid out over 5 or so years....

i would be concerned as to the type of clients the 200 were..... i would be concerned about the quality of the practice, is you friend guarantee a refund type of preparer or one who plans with clients and carefully applies the law as written.... lots of issues.....

[TheOtherMe]

Having worked for somebody who was having problems retaining clients because of the previous owner's business practices--not collecting fees when returns were delivered and seeing him lose clients over this one item, be sure and check out something as simple as that.

This was the only place of four firms where I worked over the years where there was even a question of the fee not being collected at the time client received returns.