Archimedes Management Accounting LLC

Executive Summary
LLC, (AMA), formerly known as H.F. Magnuson & Company doing business as Absec & O’Brien PLLC, (HFM.) Is currently under contract.

One client of HFM, Magnuson Management LLC, (MM) generates 40% of the current revenue and is transitioning out of the firm. Creating a unique acquisition opportunity to purchase a CPA firm possessing advantageous circumstances.

 

HFM earned $587,199 in revenues last year and has consistently generated over half a million annually in gross profits for the past four years. While MM phasing out impacts revenues, expenses significantly decrease. The Sellers’ Mark Absec and Dennis O’Brien have reduced the asking price to $349,000 excluding MM from their final valuation. $234,880 is the MM portion of last year’s revenues. A difference of $352,319 is the annual 2022 gross profit absent MM revenues. See appendix a.1.

 

Founded in 1950, the practice was grown by word-of-mouth. Catering to a diversified clientele made up of individuals and businesses, offering accounting services year-round and maintaining steady cash flow. The firm lacks an online presence or marketing efforts. AMA will leverage the current clientele by introducing subscription-based services including in order of launch, a newsletter, audit assurance, tax strategy planning, and account management. Re-branding and building interactive digital platforms attracting new clients and enhancing the current customer experience. By optimizing operations with automation technology, the rebranded firm will swiftly grow into a recognized competitor in the sector.

 

The CPA firm currently offers accounting and financial services, including tax preparation, auditing, bookkeeping, payroll, and financial consulting. Mark and Dennis, who worked for the founder Harry F. Magnuson until 2012, purchased the practice they helped build. The firm has developed a strong reputation for providing accurate, reliable, and client-centric solutions for seventy-two years.

Mark and Dennis deeply care for their clientele and will initiate personal introductions to the current clients and provide the office building, including rent, utilities, maintenance, and property tax paid in full until December 31. On January 1, 2024, AMA will contractually take over the lease and assume responsibility for the expenses. They have volunteered their expertise free for the first 45 days and will remain available through AMAs' first tax season.

 

Managing Partners & Executives: A single private money lender as a limited partnership would receive 15% to 20% equity and a five-year buyout clause.

 

The top-tier leaders as general partners may include Lyn Bell, an EOS Implementor. Receiving an origination fee of $5,000 on closing and $5,000 per session. 

 

Rob Sema, a possible general partner, and a Business Client Acquisition Strategist. Receiving an origination fee of $5,000 on closing and a TBD fee per acquisition.

 

Curtis Short, CFO, and interim CPA, is a salaried employee at a rate starting at $140 per hour, starting part-time. Curtis will prove invaluable in structuring the firm for hybrid employment with a physical location continuing to serve the current clientele and remote expansion nationwide by selecting the best talent to join AMA. Curtis will be responsible for initiating the launch of our Audit Assurance subscription and our Tax Strategy and Planning subscription. Curtis will also act as a buffer for ensuring that current clients are serviced and operations transition smoothly.

 

Kevin Strawn is a CPA and part-time employee at a rate of $46 per hour. Kevin will immediately begin servicing existing clients with bookkeeping, filing, and payroll.

 

Dennis O’Brien and Mark Absec, the Sellers, will provide their assistance in daily operations and consulting. Their Senior Administrator whom they will continue to pay through the remainder of 2023, retires on December 31, 2023. They will have a replacement approved and onboarded prior to their Admin's exit. Their current Intern will also facilitate filing during the 2023 tax season paid by them and when the Intern graduates in May 2024, she will become a full-time certified CPA and begin training as an in-house Operator. Mark and Dennis will both retire in May 2024. Consulting fees are $125 per hour part-time.

 

Megan Soli, the CEO/CMO will facilitate the rebranding and launch of AMA's online presence and subscriptions starting with the Newsletter and personal introductions by the previous owners to the current clientele. After the stabilization of AMA, she will earn certification prior to January 2024 and be ready for the tax season. AMA will amend its business name and trademark to include CPA/CMA. Immediately after closing AMA will apply for a PTIN and E-file number from the IRS while HFM covers filing. Typically assigned immediately, however, it may take a couple of weeks.

 

There is massive opportunity in the accounting industry today. Firms are firing clients who lack the capacity to carry the workload. A “hiring frenzy” has forced CPA/CMA median salaries to increase exponentially according to several recruiting agencies including Robert Half. Remote employees are the solution to meeting the demand without overcompensating in wages. Establishing strategic partnerships expands AMA's reach and facilitates growth. Tax strategy and planning targets the current small business clients.

 

Eventually, AMA will launch wealth management targeting both businesses and individuals.

 

By becoming a member of the American Institute of Certified Management Accountants, I will enroll as a CMA candidate, pass the exams, and complete the work experience. Harvard Business School Online offers self-paced courses necessary to pass the exams. I begin Financial Accounting, an eight-week program, in October and Dennis will facilitate the work experience required to receive my certification. It is my personal goal to learn and nurture my competency within the management accounting financial field.

 

Becoming a member of the Institute of Management Accountants enables AMA to uphold the highest standards of continuing education practices. Networking with industry professionals, attending relevant conferences and webinars, and participating in continuing education programs to enhance industry knowledge and expertise a practice I will lead by example for the AMA team to adopt.

 

Creating a work environment that upholds high standards and structure through project management, personal excellence, and progress will foster a meritocracy culture. The strategy includes 30, 60, and 90-day goals, an assessment with scorecards, and essential forward constructive communication. Utilizing recruitment specialists allows the firm to analyze and hire the best talent while saving valuable time. Part of the AMA's mission is to hire the highest level of performers in each accounting niche and employ remote CPAs and CMAs to perform most of the work while earning client acquisition bonuses in a percentage of the profits generated from the clients they onboard and serve.

 

The accounting industry is growing steadily, driven by the increasing complexity of fluctuating financial regulations and the need for specialized expertise. AMA seeks to increase client aptitude in the financial fields, offering an open door to information policy dissolving the mystery and anxiety the financial industry imposes on individuals and small businesses.

 

AMA has secured all the URLs and social media usernames and selected Sapien UIUX Designs to create an informative, user-friendly 2.0 + website that highlights the firm's expertise, services, and testimonials to attract and engage potential clients. Distributing a weekly newsletter offering current financial news, small business success stories, financial education, and discounts to purchase our subscriptions. Optimizing the website with relevant keywords, meta tags, and content to improve SEO gain visibility, and attract traffic. Implement a referral program to incentivize existing clients to leave filtered reviews for reputation management and encourage new business by offering sign-up discounts, rewards, or other benefits disbursed to both the referrer and the referred client.

 

Operational Improvement & EOS: The firm will focus on optimizing operational efficiency to support anticipated growth by vetting and hiring a highly educated team of professionals. Partnering with Lynn Bell an Entrepreneurial Operating Systems Implementor to facilitate the necessary strategies unique to AMA requirements and ensure proper ethics and project management practices are maintained while rebranding to attract and build a dependable passionate team.

 

Utilizing AI to streamline repetitive tasks responsibly is considered mainstream and must be monitored for quality control and only implemented at specific points during the client’s journey. Salesforce in conjunction with Zapier to implement CRM and enhance repetitive operations tailored to AMA, enabling efficient client management, lead tracking, and communication. AI-powered chatbots on the AMA website provide instant support, answer FAQs, and capture leads. Utilize AI algorithms to analyze financial data, identify patterns, and generate actionable insights for clients, providing them with added value. Leverage AI to forecast financial trends and offer proactive advice to clients, positioning AMA as a trusted advisor.

Explore AI-powered tools to streamline and automate tax preparation processes, improving accuracy and efficiency for both clients and the AMA team. Organize clients into segments based on criteria such as industry, size, and services utilized, allowing for targeted marketing and personalized communication. Centralize client information, track interactions, and schedule follow-ups, ensuring proactive engagement and personalized service

 

Thorough testing of new systems by capturing feedback from both internal team members and clients and refining processes as necessary. Closely monitor the performance of AMA's online presence, AI tools, and CRM software, adjusting based on analytics and client feedback. By embracing AI technology and CRM software AMA seizes the opportunity to engage clients more effectively, streamline operations, and position the firm for continued success in the digital age.

 

A detailed financial plan and working capital management budget that supports the goal of increasing

revenue in the first year is included in the appendix.

 

Researching existing subscription pricing for similar services ensures AMA's prices are competitive and profitable. Launch a quiz funnel targeting businesses to purchase AMAs tax strategy and planning subscriptions. The corvee tax calculator enables AMA employees to quickly assess these businesses and offer immediate solutions. Competitors are asking for $139 to $239 per month for annual subscriptions depending on the scale of the business and the hours they require since this service in this format is new to the market, AMA’s plan and pricing structure are based on current service cost analysis.

 

Regularly evaluating and analyzing key performance indicators (KPIs) allows AMA to monitor progress, identify areas of improvement, and make necessary adjustments to the marketing and sales strategies. Traditional key performance indicators will enable AMA to accurately monitor and adjust AI to optimize the return on investment.

 

Based on market analysis and growth strategies, AMA anticipates a minimum of 25% growth in the first year. Built on the solid foundation of an exemplary reputation, AMA is positioned to embark on a much larger growth trajectory. Enhancing operational efficiency and leveraging an online entity with the current customer base will inevitably increase revenue. AMA will position itself as a reputable and trusted provider of accounting services while achieving long-term sustainability and profitability. See appendix a.2.3.

 

A brief overview of the AMA's current financial position and profitability exhibits that the $352,319 revenues cover ongoing operations as well as the immediate new expenses incurred for the rebranding including new professional partnership fees, and new software costs. Current revenues sustain daily operations and maintain business continuity.

 

Mark and Dennis remaining in-house until after the 2023 tax season is the golden ticket to a successful affordable rebranding and transition. Some substantial overhead expenses including office rent, property tax, utilities, and maintenance costs don’t begin until January 1st,2024. Providing an opportunity to complete the rebrand within four months and achieve CEO competency prior to the 2023 tax season. Other estimated monthly expenses, including existing and new software licenses and technology, are easily covered by the existing revenue stream. See appendix a.1.

 

Allocation for the immediate costs of technology including hardware, software, and UIUX website build, test, and launch, and the hiring of a remote CFO and CPA to execute this rebranding plan successfully. Allocation for a contingency fund for recurring website costs, sustained rebranding initiatives, ongoing commitments to the new necessary professional partnerships, and new software upgrades are the root of efficient working capital management and distribution. Unexpected events or emergencies require a reserve fund or a percentage of working capital set aside for unforeseen circumstances. Regular assessment of the allocation plan's effectiveness with flexibility to adjust allocations based on changing business needs, economic conditions, and performance evaluations. Emphasis on the significance of disciplined working capital allocation for sustained growth and financial stability. See appendix a. 4.

 

Private money lender terms are as follows: 15% - 20% Equity TBD and 10% Simple Interest for $210,000 which includes the $125,000 for equity on closing/down payment, $1,000 for half the closing costs, and

$84,000 for working capital. 10% simple interest monthly payments of $1,750 for a term of 24 months and a balloon payment of the full principle of $210,000 in September of 2025. And an amortization of 5 years. Equity payments are to be determined. Excluding equity payments provides a clear representation of net profits. See appendix a.5 and a.3.

 

Entering into this agreement as the borrower I wish to communicate a clear understanding of the exit strategy or how the loan will be repaid.

 

Balloon Payment: The borrower pays simple interest monthly for 24 months, beginning October 1st, and then receives a 'balloon' payment of the remaining principal at the end of the loan term on September 1st.

 

Refinancing: Refinances with the PML or replaces the private money loan with a loan from a traditional financial institution.

 

Lenders' Policy: The PML's investment is protected in the event of default by a lender's insurance policy currently covering $250,000.

 

Loan Term: The loan term could be extended or shortened during a refinancing.

 

Collateral: I submit my irrevocable trust as collateral. See appendix a. 6

 

We will establish a mutually beneficial exit strategy and ensure each party has clear terms and an understanding of the relevant responsibilities and rights.

 

I appreciate your time and interest in this unique and lucrative opportunity. 

 

Megan Soli

CEO

(208) 973-9517
[email protected]