Patrick Dichter·March 26, 2022

Shut Out by Industry Brokers, an Entrepreneur Finds a Way

Patrick Dichter, a former digital marketing executive and small-business consultant at Cultivate Advisors, bought Apple Tree Business Services — a bookkeeping, payroll, and tax firm based in New Hampshire — at the end of 2021 for a price in line with the industry's 0.9–1.5x revenue range on $1.2m in revenue and $330k SDE. Industry brokers refused to work with him because he is not a CPA, so he built a proprietary email outreach campaign (500 emails, 20 calls, 3 LOIs) and found the deal directly with the seller, Steve. What attracted him was the firm's productized monthly-subscription model, strong client stickiness, an experienced management layer that had largely removed the seller from day-to-day client work, and membership in PASBA — a peer association that gave him an instant playbook for scaling. Two months post-close, all clients were retained and MRR was up 10%. His goal is to grow from $1.2m to $5m in revenue within five years by niching into trades and professional-services clients and eventually building a holding company platform with further acquisitions.

Deal facts

multiple: ~1.0–1.5x annual revenue (per industry range stated; priced 'right in the middle')
sde ebitda: SDE $330k
revenue: $1.2m
notes: Closed end of December 2021. Business trades 0.9–1.5x annual revenue per guest; purchase price not explicitly disclosed. SBA banker (Live Oak) mentioned but loan terms not stated.

Why this business

Bookkeeping kept coming up during his consulting work at Cultivate Advisors — nearly every client had messy books, and he could see how transformative clean financials were for small businesses. He liked the recurring/sticky revenue model (hard to leave a firm doing decent work), the platform it creates for future acquisitions, and the fragmented cottage-industry nature of the space versus the higher competition in marketing agencies.

What's working

Strong client retention — every client retained two months post-close; monthly recurring revenue up 10% over prior year
Productized, bundled service model (bookkeeping + payroll + tax on a monthly fee) creates stickiness and stable cash flow
Three experienced managers who own client relationships — seller (Steve) was down to only two active client relationships himself, making transition less owner-dependent
Membership in PASBA (Professional Association of Small Business Accountants) provides best-practice playbook, pricing strategies, job descriptions, and a mastermind peer group — 'best practices you'd get in a franchise without paying a franchise fee'
Smooth staff transition — team was receptive to new non-CPA owner because seller framed it positively and Patrick moved slowly during tax season
Proprietary outreach strategy (500 emails, ~20 calls, 3 LOIs) succeeded where broker channels were closed to him as a non-CPA

What's hard

Brokers in the accounting/bookkeeping space refused to work with him because he is not a CPA — had to find the deal entirely through proprietary direct outreach
Very few accounting firms at scale (over $1m revenue with strong SDE) are on the market; the ones that exist either sell very fast or owners refuse to sell
Filling the seller's shoes after the transition — Steve is highly skilled and staying only through May (tax season end)
Sitting on hands during tax season — unable to make operational changes due to staff stress and capacity constraints until May
Narrower ideal client profile than expected — many inbound leads are turned away due to multi-state payroll complexity or short intended tenure
Tax work is more art than science — 'two different CPAs can have just completely different opinions on what to do in certain cases'

Notable quotes

I probably submitted six LOIs and so I dug in and due diligence on a few of those and even after some of those deals that didn't go through I continue to remain excited that there'd be one out there and that I could make this thing go.

I emailed them all and I said hey remember me I bought a firm that was over a million like maybe be more open-minded next time so I was petty like that and I sent them all an update.

It's a slog to get it up to a million in revenue and then it seems like you can move much faster to go from like one to five million.

I tell people now we're kind of a Toyota value prop — like we're not the most expensive game in town but we're not the cheapest but it's really good value and you're gonna get a better experience.