In the last edition, we explored Loren Feldman's journey from journalism to entrepreneurship and the lessons learned along the way.

This week, we're diving into the world of accounting and acquisitions with Patrick Dichter, owner of Appletree Business Services.

Fast Facts:

• The global accounting services market is expected to reach $735.9 billion by 2030, with a CAGR of 6.4% from 2022 to 2031

• In 2021, there were over 1.4 million accountants and auditors employed in the United States

• Accounting firms are increasingly becoming targets for acquisition as owners look to exit and larger firms seek to expand their client base and service offerings
  

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Overview:

Patrick Dichter is the owner of Appletree Business Services, which specializes in accounting and bookkeeping services for small businesses.

He has successfully acquired three accounting firms, leveraging his background in digital marketing and small business consulting to drive growth. 

The Story:

Patrick Dichter's path to becoming an acquisition entrepreneur in the accounting space is a testament to the power of identifying opportunities and taking calculated risks.

With a background in digital marketing and small business consulting, Patrick noticed a common pain point among his clients: poor bookkeeping. 

Seeing an opportunity, he set out to acquire an accounting firm, despite not being an accountant himself.

Patrick is right about the need for solid bookkeeping. Accounting data is the language of business. It’s how you stay on top of the business and measure how things are going. 

If that language is late and garbled, the owner is flying blind and doesn’t know where his problems lie. If you don’t have good bookkeeping, stop reading and call Patrick now.

After a gruelling 10-month search, Patrick successfully acquired his first firm, Appletree Business Services. 

The acquisition process was a roller coaster, with deals falling through and intense due diligence. 

So, you know, a normal search. 

However, once he had his first firm under his belt, his business consulting skills came in handy and everything changed making subsequent acquisitions even easier.

Sellers began approaching Patrick directly and banks viewed him as a more credible buyer. Within a year, he had acquired two more firms, rapidly expanding Appletree's client base and service offerings.

Despite not being an accountant, Patrick's experience in digital marketing and small business consulting proved invaluable in growing Appletree. 

He modernized the brand, improved the website, and focused on generating leads through digital channels.

Patrick’s consulting skills and experience were also key in integrating the acquired firms. Integration has been one of Patrick's biggest challenges and it is often overlooked by acquirers. 

They love the deal and the hard work of making the business work after the deal is done isn’t something they plan for. 

Making it even harder, accounting professionals often resist change, requiring a delicate balance of leadership and patience to successfully blend cultures and processes. Imagine managing bookkeepers and accountants all day!

While acquisitions have been a key driver of Appletree's growth, Patrick recognizes the importance of organic growth as well. 

Tuck-in acquisitions are time-consuming and resource-intensive, making it crucial to focus effort on promoting organic growth. It is almost always the cheapest and best kind of growth. 

Acquisitions are expensive and hard.

Acquiring a business is never easy, and Patrick's journey highlights the challenges involved. From finding the right deal to securing financing and conducting due diligence, the process requires persistence and resilience.

• Having experience in consulting with small businesses can be a key differentiator for an acquirer. You know how these types of companies operate and where potential bodies are buried. I’m increasingly convinced that searchers need more operational experience with small businesses before acquiring to reduce risk 

• Balancing organic growth and acquisitions is hard. Operators tend to focus on promoting organic growth because that is what they know and acquirers like to do deals. The right way is to fully maximize your cheapest source of growth, organic, and then use acquisitions as a way to break through growth barriers, scale, get into new geographies, or add additional capability

• If you are going to serially acquire, you need to plan for integration. If you are small that means you as the operator are going to be heavily involved. Accountants don’t like change but other types of employees don’t love it either. If you don’t integrate well you can lose a lot of the value you just paid for

• Gaps in the market don’t need to be revelations. Bookkeeping has been around since the Babylonians but very few people do it well. Operational excellence can set you apart in many markets

Subsequent acquisitions came more easily, with sellers approaching Patrick directly and banks viewing him as a more credible buyer. 

Within a year, he had acquired two more firms, rapidly expanding Appletree's client base and service offerings.

📅 Next Week:

Next week, our guest will be John Wilson. This will be a two-parter. The first will cover the home services industry and his experience building an empire within this space. The second part will focus on how he scaled his home services business to $100m in revenue. 

Keep growing,

Alan

P.S.

The most recent episode of The Small Business Mentor Podcast is live. My guest this week was Hunter Durham. We dived deep into his regrettable experience navigating bankruptcy. 

Check it out here:

Apple: https://bit.ly/3HiB6qq

Spotify: https://spoti.fi/3O2fK4g

P.P.S.

Do you have a small business growth story and want to be featured? Ping me on X @apentz, or submit at http://www.fame.so/sbp-story