The short answer: The first 100 days after buying an accounting practice determine whether the client list you financed survives. Sequence three windows: consent and notification (days 1–14), staff stabilization (days 15–45), and a freeze on fees, software, and procedures (days 46–100). Disciplined transitions retain 90%+ of clients; careless ones erode for two years.
- AICPA interpretation 1.400.205 requires a written consent request before any file transfers, with consent presumed only after at least 90 days of silence.
- Purchased goodwill, the client list, and the seller’s covenant not to compete amortize over 15 years under IRC §197. A $1,270,000 intangible allocation yields $84,667/yr.
- Florida presumes a seller non-compete of 3 years or less reasonable and more than 7 years unreasonable (Fla. Stat. §542.335).
- A 10-year SBA 7(a) acquisition note of $1,056,000 costs roughly $13,955/mo at an assumed 10% rate. Losing 12 of 240 clients consumes 4.3 months of that debt service.
Last updated September 2026.
Buying an accounting practice closes a transaction; the first 100 days complete the acquisition. The purchase price bought a client roster, a staff, and a set of habits, and all three are mobile. Practices that execute a structured transition retain 90% or more of clients in year one. Practices that alter fees, software, and personnel in month one hemorrhage clients gradually for two years, well after the retention holdback has released.
The calendar below is the sequence Debit & Co. applies when a firm client absorbs a purchased book. Each window carries a compliance obligation, a client obligation, and a staff obligation.
What should happen in the first 100 days after buying an accounting practice?
Three windows, three distinct objectives. Days 1–14 secure the legal authority to serve the clients you purchased. Days 15–45 anchor the personnel who actually serve them. Days 46–100 demonstrate that nothing clients valued has changed.
| Window | Clients | Staff | Compliance |
|---|---|---|---|
| Days 1–14: Notify and consent | Joint announcement letter; personal calls to the top 20 relationships within 10 days | Day-1 all-hands; written offer letters within 5 business days | 1.400.205 consent request with the 90-day presumption; §7216 list-transfer conditions; engagement letters reissued |
| Days 15–45: Stabilize | Seller introduces the buyer to every client above 2% of fees | Compensation benchmarked; individual conversations; no title changes | Purchase-price allocation drafted for Form 8594; §197 amortization schedule booked |
| Days 46–100: Hold steady | No fee, billing-term, or location changes before the first busy season concludes | Day-90 retention checkpoint; cross-training without conversion | Transition-services hours tracked; holdback reconciliation prepared |
How should you announce an ownership change to clients?
In writing, jointly, and before any file moves. AICPA Code of Professional Conduct interpretation 1.400.205 obligates the selling firm to request each client’s written consent to transfer its files to the successor. The request must disclose that consent will be presumed if the client stays silent for a period of not less than 90 days, unless state law prohibits the presumption. The interpretation became effective June 30, 2017. The acquiring firm must satisfy itself that the seller complied, per the Journal of Accountancy’s summary.
Tax clients carry a second constraint. Treasury Regulation 26 CFR 301.7216-2(n) prohibits transferring a preparer’s taxpayer list to anyone except in conjunction with the sale or other disposition of the preparation business. The acquirer inherits the identical restrictions. The announcement should therefore identify the purchaser and explain how taxpayer information will be safeguarded.
Sequence outreach by fee concentration. Relationships above 2% of annual fees receive a seller phone call within 10 days, then a joint meeting. Everyone else receives the letter, followed by a buyer introduction inside 30 days.
Should the seller stay on during the transition, and for how long?
Yes. Budget for active involvement through the first busy season and telephone availability for a year. Harry L. Olson, CPA, writing in the Journal of Accountancy, frames the entire period:
“During the first couple of years after closing, the buyer should make every effort to minimize change.”
Harry L. Olson, CPA, Journal of Accountancy, September 2016
Olson also recommends keeping the seller’s office open at least through the first busy season. He cautions that an earnout with a large collections contingency is “tantamount to no real commitment from the buyer.” The transition-services agreement should specify weekly hours, a taper schedule, and signature authority on deliverables during the overlap.
The covenant not to compete frames the same horizon. Florida Statute §542.335(1)(d) presumes a restraint against a business seller reasonable at 3 years or less and unreasonable beyond 7 years. Both presumptions are rebuttable. The covenant is also a tax asset. IRC §197(d) classifies a covenant not to compete executed in connection with an acquisition as a §197 intangible, amortizable over the same 15 years as goodwill.
How do you retain staff after acquiring a practice?
Compensate them to stay, communicate it on day 1, and alter nothing about their work for 90 days. Clients follow the preparer who knows their file. The Bureau of Labor Statistics projects roughly 124,200 annual openings for accountants and auditors through 2034. A senior who resigns in month two is employed elsewhere by month three, and every client on that desk becomes vulnerable.
Three mechanisms work. Written offer letters within 5 business days, at or above current compensation, eliminate speculation. Retention bonuses for the two or three people holding the deepest relationships, sized at 8–12% of base and paid at day 180 and day 365, price loyalty explicitly. A compensation benchmark against BLS occupational data inside 45 days reveals underpaid seats before a competitor discovers them.
Defer the reorganization. Titles, reporting lines, and review cycles remain as the seller left them until the buyer has observed one complete busy season.
When is it safe to change fees, software, or processes?
After the first busy season, one variable at a time. Fee increases announced within 100 days read as the motive for the sale. Software migrations in the same window place staff on an unfamiliar ledger while they are also absorbing unfamiliar clients.
The working sequence is procedures, then software, then pricing. Cross-train staff on the buyer’s month-end close during days 46–100 without converting a single client file. Migrate the general ledger, whether to QuickBooks Online, Xero, or NetSuite, during the quiet quarter, in batches of 20–30 clients. Reprice at engagement-letter renewal, capping the first increase at 5–8% for clients the seller had not adjusted in three or more years.
Automation lets the buyer absorb volume without absorbing churn. An AI-native ledger such as Puzzle gives you the data; a team turns it into a close. The Continuous Close Method™ delivers the acquired book on the same 5–7 day monthly close the buyer’s existing clients receive. That is the upgrade clients notice without being asked to change anything.
How much client loss is normal in the first year, and what does it cost?
Disciplined transitions hold attrition under 10% of revenue. The penalty for exceeding it lands against fixed debt service, so model it before closing. Assume a practice of 240 clients billing $1,200,000 in trailing fees, an average of $5,000 per client, acquired for $1,320,000 (1.1× fees) with 80% financed.
- Debt service: a $1,056,000 SBA 7(a) note over the program’s 10-year maximum maturity for a change of ownership, at an assumed 10% rate, costs about $13,955/mo, or $167,460/yr.
- Attrition at 5%: 12 clients × $5,000 = $60,000 in forfeited annual fees, equivalent to 4.3 months of debt service.
- Attrition at 12%: 29 clients × $5,000 = $145,000, equivalent to 10.4 months of payments on a note that remains fully outstanding.
- Tax shield: allocate $1,270,000 to goodwill, the client list, and the covenant (Form 8594 Classes VI and VII). Under §197 that amortizes at $1,270,000 ÷ 15 = $84,667/yr, or $7,056/mo, beginning with the acquisition month.
Purchaser and seller must each attach Form 8594 to their income tax returns for the year of sale, and the allocations must agree. Draft it during days 15–45 while the deal team remains assembled.
A 10% retention holdback of $132,000 absorbs a 10% revenue decline once. Attrition beyond that threshold, or attrition arriving in year two after release, is the buyer’s expense alone.
Aaron Ressel reviews the transition calendar alongside the purchase-price allocation for every firm client acquiring a book. The two documents fail together: a late Form 8594 and a hurried client letter usually share one cause, a deal team that dispersed on closing day.
Related reading: how CPA firm economics and staffing work, hire, offshore, or partner at capacity, and white-label accounting services explained.
Frequently asked questions
How do you transition after purchasing an accounting practice?
In three windows: consent and notification in days 1–14, staff and relationship stabilization in days 15–45, and an unconditional freeze on fees, software, and procedures through day 100. Compliance filings, including the Form 8594 allocation, are drafted inside the second window.
How should you announce an ownership change to clients?
Through a joint letter from purchaser and seller, dispatched before any file moves, that requests consent to transfer files and discloses the 90-day presumption required by AICPA interpretation 1.400.205. Relationships above 2% of fees also warrant a personal call within 10 days.
Should the seller stay on during the transition, and for how long?
Yes, actively through the first busy season and by telephone for roughly a year, with weekly hours and a taper written into the transition-services agreement. Florida’s 3-year presumption for seller non-competes defines the outer boundary.
How do you retain staff after acquiring a practice?
Offer letters at or above current pay within 5 business days, retention bonuses of 8–12% of base for the relationship holders, and a BLS-referenced compensation benchmark inside 45 days. Titles and workflows stay untouched through the first busy season.
When is it safe to change fees, software, or processes after the purchase?
Once the first busy season has run under the new ownership. Introduce procedures first, migrate software second in batches of 20–30 clients, and reprice last at engagement-letter renewal with initial increases capped near 5–8%.
How much client loss is normal in the first year, and what reduces it?
Under 10% of revenue when the transition is disciplined. Seller participation, retained personnel, an unchanged location, and deferred fee or software changes are the four protective factors. On a $1,056,000 ten-year note, losing 12 of 240 clients equals about 4.3 months of payments.
