Melville-based Diapoules & Feinstein CPAs is growing their business the old fashioned way, one person at a time — or at least one solo practitioner at a time.
As Baby Boomers age, the accounting profession, as well as business in general, is seeing a kind of echo boom as leaders retire and retiring solo practitioners look for a new home for their clients. That’s leading to earnouts and opportunities for larger firms to add a new book of business and for employees to buy a business.
“We’re experiencing growth,” said Simon Hector, a partner at Diapolous & Feinstein. “There are opportunities for firms to grow.”
Solo practitioners, some with small or large staff and some with virtually none, are looking to sell to monetize their business as they retire. Many get to know people at acquiring firms through networking and other groups such as the National Conference of CPA Practitioners, as accounting firms’ deals these days often involve bringing on board smaller firms.
“What is the right price, the right to earn out?” Hector asked. “If we retain clients, you get a piece of the pie for X number of years.”
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However you look at it, important numbers for many accountants include age as mandatory partner retirement kick in along with Baby Boomers seeking to exit.
About one quarter of accounting firm partners were older than 60, according to a 2024 study by The CPA Journal.
“The takeaway is that one-quarter of accounting firm partners are near or past many of the mandatory retirement age provisions,” according to the Journal.
Mandatory retirement doesn’t necessarily mean accountants must stop working, but CPAs have to surrender their equity, according to the Journal.
“A lot of sole practitioners are coming up on retirement. What do they do with their clients?” Hector asked about these firms. “Can they transition their business to someone who provides the same care and diligence for their clients and the environment and right fit?”
That’s leading to sometimes shotgun mergers as solo practitioners basically sell their book of business, merging with bigger firms and winding down their own work.
“We are looking at deals with sole practitioners. Some have reached out to us. They need a place,” Hector continued. “They’d like their clients to be taken care of. They want to get rid of some of that administrative burden, bringing it into a larger firm, someone they can trust.”
Edward Mendlowitz in a column titled “Art of Accounting: Solo firm exit prospects” in Accounting Today, said some solo practitioners have one or two staff members, while others have as many as 25 employees.
In addition to existing firms, he said accountants employed at larger firms sometimes seek to buy up solo practices.
“Many of the current buyers of small practices are accountants who have been employed and who want to own their own businesses,” Mendlowitz said. “They are ‘alive’ and take ‘ownership’ and when they feel the time is ripe, they look to buy a practice as their ticket into business.”
A shortage of CPAS is making these mergers even more attractive at a time when CPA salaries are on the rise. A report by global HR and payroll firm Deel said accountants reported the highest hiring and salary growth of any profession in 2024.
Accountant hiring surged 74% and salaries grew by 15%, outpacing software engineers as demand for the profession amid a web of regulations increases.
“For most of the past decade, companies couldn’t hire software engineers fast enough,” the report said. “Now, accounting is becoming the new must-have skill for global organizations.”
Illness is driving some quick transitions as solo practitioners who haven’t done succession planning face a crisis and hurry into the arms of larger firms.
“What if they have an illness in the busy season?” Hector asked. “Do they have someone their clients can call until they become healthy again?”
He talked about one solo practitioner who merged his practice rapidly, as he faced health issues that forced him to retire.
“He transitioned his practice or everything would be lost,” Hector added. “If everything is lost, then there’s no income. He can lose his entire practice.”
Matches, however, aren’t automatic. A good fit and a good deal are key, including the right personality of the CPA and the right terms. But the measure of success, in the end, is retention. Aging clients can be an issue if they retire or pass away, reducing the book of business, but many clients typically stay on during transitions.
Firms inform clients that they are taking over the clients and providing the service. But as with any transaction, there is customer run-off. Diapoules & Feinstein lost about 30% of clients in one case.
“Some passed away, some moved. There were multiple reasons,” Hector said. “They didn’t want the new relationship. They went with someone close to their home or someone they knew.”
The CPA Journal said firms typically retain 90–96% of clients when partners leave. Best practices include partner agreements requiring partners to give two years’ notice and creating a formal client transition plan.
Some CPAs stay on board and some leave immediately, or almost immediately, especially if health is an issue. In other cases, CPAs who live near the acquirer firm find it’s convenient, fulfilling and lucrative to continue working.
“Some stay for a while, seven years or longer,” Hector added. “Some want something to do. It keeps the mind active.”
