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Businesses looking to expand through acquisition set their sights on regional accountants, says NAB
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Country practices top targets for takeover
22 July 2022
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Small regional accounting firms are a magnet for businesses looking to expand, according to an NAB survey.
Its research showed that in metro areas there are 1.8 buyers for every seller but this jumps in regional areas to 2.5 buyers for every seller.
NAB executive regional and agribusiness Julie Rynski said that the research reflected the expectations of an active accounting merger and acquisition market with regional areas being the most popular.
“It’s fantastic to see the demand for regional firms increasing,” said Ms Rynski.
“As businesses continue to rely on their accountants as trusted advisers, the democratisation of technology means that smaller firms in regional Australia increasingly punch above their weight.”
Technology meant smaller firms could do more and also enabled regional firms to compete with larger businesses, unrestricted by their location.
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“Regional firms are no longer limited by geography when it comes to attracting clients,” said Ms Rynski.
“This allows them to compete with bigger firms but with lower occupancy costs and salaries.”
This made regional firms increasingly attractive as acquisition or merger targets for the one-third of businesses hoping to expand, she said, but also put them on the endangered species list.
NAB said the cost of debt financing remained relatively low, so acquisitions remained enticing.
The research also found that smaller firms were more predisposed to sell, with 38 per cent of prospective sellers having revenue below $1.5 million, and 46 per cent revenue of $1.5 million to $4 million.
“Regional firms are definitely attractive acquisitions in their own right,” said NAB professional services banking executive Adam Holster
“The market is very weighted towards smaller players, and from what we see many do not have a succession plan in place. It’s clear why so many sellers are at that end of the market.”
Meanwhile, the biggest group of firms that are looking to acquire new businesses according to NAB research were those with revenue over $4 million.
Mr Holster said small regional firms differed from metro acquisitions as the client base and workforce were more close-knit.
“In a lot of cases we are talking about selling their life’s work, they’re selling long-held relationships with clients as well, so they want to make sure they are providing a great experience for their clients,” said Mr Holster.
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