New research by NAB reveals one in three Australian accounting firms plan to grow by acquisition, with regional accounting firms the most sought after in the mergers and acquisition (M&A) market.
The research shows the current ratio of buyers to sellers is 2.5 in regional areas, compared to 1.8 buyers for every seller in metro areas.
NAB Executive Regional and Agribusiness, Julie Rynski, said while the research shows expectations for a very active accounting M&A market, what’s most interesting is the demand for regional firms.
“It’s fantastic to see the demand for regional firms increasing. 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.
“Regional firms are no longer limited by geography when it comes to attracting clients. This allows them to compete with bigger firms but with lower occupancy costs and salaries,” Ms Rynski said.
The research also found that regional firms valued cultural fit over price, with in-person meetings critical to the M&A due diligence process. Around 80% of firms said they wouldn’t proceed with a sale without face-to-face meetings.
“That in-person meeting is still very important to assessing qualities like cultural fit, which is a priority especially for regional folk,” Ms Rynski said.
The NAB research also found that most firms looking to sell had revenue of less than $1.5 million or revenue of between $1.5 million and $4 million. Only seven per cent of firms with revenue of more than $10 million were looking to sell.
