There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Roger Harris: All right. Hello everyone. It's another federal tax update podcast. I'm Roger Harris. I'm joined as always by Annie Schwab. Annie, good to see you again.

Annie Schwab: Hello, Roger. How are you doing? Days before the end of the year. How are you?

Roger Harris: End of the year Christmas. New year 2026. Round the corner.

Annie Schwab: So yeah. Coming in fast.

Roger Harris: Yeah. Some ways I'm glad 25 is going [00:00:30] and. But other ways I thought it was a pretty good year. So hope it hope it was good for you.

Annie Schwab: It was good year for me.

Roger Harris: Yeah. Uh, we have some special guests joining us again today. Annie, how about talking about, uh, who we have and what we're going to talk about?

Annie Schwab: Sure. Um, so it's our pleasure to have both Andre Costa and Emily Goodman. These are franchisees. Um, and they have been with the firm for several years. Um, Andre actually started his business in 2006. And then Emily [00:01:00] joined in 2015, and after several years of working together, they they got married back in 2023. So together they have expanded their business into five locations. Um, they've built a strong full time team of ten members. Andre's a CPA and he focuses on building, advising, and maintaining the client relationships. Emily oversees the operations and embraces the vision of running a modern, efficient firm. And together they have figured out a way to expand not [00:01:30] only organically, but by acquiring other firms. And that's what we're going to talk about today. So welcome, Andre and Emily. It's a pleasure to have you here.

Andres Costa: Thank you,

Emily Goodman: Thank you, thank you. Happy to be here.

Roger Harris: Yeah yeah. Welcome guys. And and we are going to talk about, um, acquiring firms. And I want our audience to recognize that obviously if you're interested in acquiring firms this is going to be terribly relevant to you. But if you're not looking to acquire but you're looking to sell, it's also relevant because they're going to explain to you [00:02:00] what a buyer is looking for in the marketplace, and you need to be thinking of it. How does my firm look based on what they're telling me a buyer looks at? Because it's important that you maximize the value of your firm. You've put many years in it. What separates it from a job is the equity that you've built up in it, and you want to get as much of that as you can. So even if you're not thinking about buying, I know everybody's probably thinking about selling. So this should be at.

Annie Schwab: Some point.

Roger Harris: Right? At some point. So we're excited to have this. So again welcome [00:02:30] guys. And as Annie said Andre, you've been with us for a while. And I know when you started you were doing all organic growth, which I know you're still doing and you're real good at. So what kind of made you change. And and this is for both of you, obviously. What kind of triggered this desire to acquire firms. And when did you get started in doing it.

Andres Costa: You got started right at 2021, right? Um, there's safety in numbers. Uh, to me, [00:03:00] that's that's where I came from is, uh, I was in big corporate America. And one of the things that I learned there was that Wall Street. And I know I'm going way out to way out, way out to explain something. But Wall Street, if you have a very small, very, very profitable company, they're not interested in it. Right. And if you have a very large, very large with a lot of revenue company that makes no money or very little, they're more interested in that. And the reason is, is because when you have a lot of revenue, you have a lot of possibilities. [00:03:30] So that's the angle that I took. Um, and also the fact that at some point I realized that I was just self-employed. And really my goal was always to have a business. So that's where okay, so you can grow organically. I love going out there and gaining a client. That's that's a real high for me. But that's not maybe as efficient as being able to buy a group of clients.

Roger Harris: Right? Yeah. And you are good at that. And it's you know, that method hasn't really changed. [00:04:00] It's pounding the pavement, knocking on doors and doing all that sort of thing, and you're exceptionally good at it. Some aren't. Uh, and this may be their only real activity to have sustained growth or substantial growth, because they're either not going to do the hard work necessary to get a client one at a time, or they're not good at it. And either way, they they get frustrated. And as I'm sure all of you have heard me say before, growth and having new clients allows you to not put up with the [00:04:30] stuff of bad clients because they're not as important to you because you know they can be replaced. So I think growing however you do it makes you better at operations. So.

Andres Costa: Um, I'll chime in with one more thing, which is it's not easy. I mean, needless to say that it's not easy to, um, for the doors to be shut in your face for you to go out there and, uh, you know, have a terrible. To me, I get antsy when I go two, three weeks and I haven't talked to a [00:05:00] prospect and. And that's just the way it is. Um, but it's not easy. So anybody who thinks that that, uh. You know, they're going to make three calls and close on one immediately. It's just not the way it works.

Roger Harris: Yeah. It takes a really thick skin because you're going to hear no or get out of here a lot more. Than you're going to hear.

Emily Goodman: Yes, absolutely. Absolutely.

Annie Schwab: But I guess you learn from it. Each one has got to be different but similar and in some form or fashion. And I'm [00:05:30] sure you're. I don't know. The more you do it, the more confidence you have. I guess potentially you could, you know, notice some specific aspect, you know, oh, this isn't going to be a good one or oh, this, you know, we're we're feeling comfortable with this one kind of thing. I'm sure part of it's gut, part of it's repetition.

Andres Costa: I've said this a number of times to folks that that are trying to get out there. And to me, the turning point was the day that somebody told me, hey, you're [00:06:00] sitting there in that in the parking lot of that shopping center, and you are really anxious because you know that you're going to bother somebody when you walk through the door. And I told, you know, they need you more than you need them. And that that kind of was the breaking point for me that said, okay, I'm walking in there with all the confidence in the world, and if they don't need me, great. But what if they do?

Roger Harris: Yeah. And again, I want our listeners to understand we're not saying what Andre's talking about isn't something you should do and get better [00:06:30] at and try to get better at. Organic growth should always be part of a firm. But this is an alternative to doing just that, not instead of that. And, uh, because I think all of us need to be capable of going out and bringing in a new client, one at a time, as well as bring them in 100 at a time or 200 at a time, whatever you're doing. Okay, so you made the decision to do acquisitions. What did you do next?

Emily Goodman: Um.

Andres Costa: Actually, [00:07:00] um, making sure we had the cash and the ability to borrow money.

Emily Goodman: Yeah, sure.

Andres Costa: Yeah, that was that was that was kind of the first thing. Um, but but the, you know, it was at a point where Emily was thinking that if philosophy was to take care of a very small group of clients, a very small group of exceptional clients, and it would be just me and her. And so [00:07:30] we decided together that, no, that wasn't going to be the route the route was going to go and look for for new volume. For volume. And so we didn't really have a plan once we had cash and we had or the ability to borrow and a couple of practices were put in front of us. We really, honestly didn't have a plan. All we knew is that we wanted to scale and, and and we pulled the trigger. Uh, probably [00:08:00] not the best deal that we could have had, but we. But I'm going to let Emily go from there.

Roger Harris: Yeah.

Emily Goodman: Yeah. The first deal that we did, we did it at the same time of our second deal. We did. Both of them closed within two days of each other.

Roger Harris: So you jumped in full force? Yeah.

Emily Goodman: Yeah. What what was big? When I say big, um, it was a $200,000 revenue firm, and the other one was maybe 75. [00:08:30] So there are both very small firms in different locations, nowhere close to us. Um, what stuck out with these guys is they were both pageant firms, so.

Roger Harris: We Yeah.

Emily Goodman: Always. Until now. We're we're almost under contract with a non. Pageant firm. But the firms that we've acquired in the past have been pageants. Um, that made the whole process a whole lot easier. When. Yeah, [00:09:00] yeah.

Andres Costa: Um, yeah.

Emily Goodman: Standards are there. Yeah. Well, the standards are there. Yeah. Um, with other pageant owners. So that helped. Um, so yeah, if I go back to 2021, COVID everything was happening, um, the SBA was given out Eidl loans and all the loans. So we were like, well, look, we should we should do this and we should. This is how we grow. Um, so we had [00:09:30] cash in hand burning holes in our pocket. Um, the first purchase that we did, we paid all in cash. Um, we learned from that mistake. Nearly from that. So, um, uh, you want to talk about that?

Andres Costa: Well, I mean, um, part of what I, what I was thinking about last night, what I was going to say is that, um, we are all at different the evolution of a practice, um, [00:10:00] at when you buy that first firm, you have a reason to buy that first firm. The second time that you buy or the third time you buy, your practice has evolved. And there's different angles that you look at and there's different things that you look at. So I can't speak. I know our audience hopefully is somebody that's trying to seek some, some, some knowledge of what to do if they're in this mode of purchasing. So I'm saying that if if you are a single practitioner and you have excess [00:10:30] capacity on hand, you can go out there and you can pay premium for a number of clients, okay. But now you're at capacity. So the next purchase that you have. You're looking for help. So you're looking for help and you're looking for clients at the same time. So in our first purchase, she's she's she's said it correctly that we had we had cash in our pocket and we it was burning a hole. We had to do something. So we we know we overpaid. Um, learned [00:11:00] from it. Uh, you know, it's paid off. It's. We have done well with that practice, but, um, we could have done so much better. Uh, it was it was a learning. Yeah, it was, it was it was all about learning at that time.

Annie Schwab: I think a good point, because once you're at capacity, it's not just about getting clients. Even if you got rid of your bad clients and kept all the good clients, you still need the relationships and the employees and the [00:11:30] knowledge to to. Because the last thing you want to do is acquire them and then not hold up your end of the deal. Don't offer perfect service. You know you don't want to drop the ball at that point. So you really have to think ahead about, you know, how many. I mean, I don't know, is there a number that you look for in the sense of how many clients stay when you acquire?

Emily Goodman: Well, I think that goes back to the type of firms that we look for, because we decided a long time ago we're going to be heavy accounting, monthly services, [00:12:00] okay. Not tax heavy. The firms that we have looked at buying and the firms that we have bought were shaped just like us. So that that really helps us to to on board because we've already created the system back here. On what we expect monthly. We have that those down. It's it's about getting those employees to adapt to our system. Um, the firms that we look at mirror, mirror us. [00:12:30] We look for ones with employees 100%, 100% employees. If they don't have employees. We don't.

Andres Costa: Well, again, remember what I said about the evolution is you're either buying clients or you're buying a business. Business may give you a return on your investment. So which one is it? What stage of the journey are you at?

Roger Harris: Right.

Emily Goodman: Because it's it's look different for us at every benchmark.

Roger Harris: Yeah. When you were looking inside Paget that was easy because that was inside [00:13:00] a group you were familiar with. As you have ventured outside of the community that you're in. Where do you look for firms? How do you identify them? Uh, do you call brokers? Do you just where do you look to find outside firms? And do you look in a particular region or does it matter?

Emily Goodman: It does matter, absolutely. That's a we we've kind of learned that within six hours of Nashville because that's where we call our home base. That's where our home [00:13:30] is. If we could drive there within six hours, that's a good firm for us. That doesn't mean we won't look outside that, but the conditions have to be right. Meaning if we're looking outside, it's probably buying a business that's operating on its own that we don't need a lot of. They don't need a lot.

Annie Schwab: Of hands on. Right?

Emily Goodman: Yeah. Um, we have yet to find that. So within six hours. Um. I'm trying. What were your other questions in there?

Roger Harris: Well, where do you look [00:14:00] again now that you've reached out to?

Emily Goodman: Besides, you guys, um, accounting practice, sales.

Andres Costa: Brokers.

Emily Goodman: Brokers. And then we've had a couple word of mouth from our banker connections. Uh.

Andres Costa: We had I had I talked to a, uh, a payroll, uh, sales person who goes around and talks to everybody, and he's put me in contact with a couple of smaller firms that that were looking to sell. Um, so, yeah. [00:14:30]

Annie Schwab: Building networks, basically networks, relationships, word of mouth, joining, you know, all the different organizations.

Andres Costa: Yeah. There is no there is no one single way. Yeah. No.

Roger Harris: There's plenty of practices for sale. So the question is where do you get the best leads? You know, the ones that you're interested in because we're in a buyer's market because there's so many firms for sale and a much smaller number of buyers out there. So it shouldn't be hard to find them. But you do need [00:15:00] to go to people that you trust that will refer, you know, the right kind of firms to you, not just their buddy who's trying to sell.

Annie Schwab: And like you said, like you want them to be in a similar business model as you so that the transition, you know, is quick and smooth. Yeah. So, you know, like you said, accounting was one of the traits, um, location seems to be, you know, one of the key traits. Was there anything else that is really like a must, must have.

Emily Goodman: I [00:15:30] must have. So that's when.

Andres Costa: You know that now we can we can talk about more detail. Certainly we're going to look at we're going to look at fees and where they're pricing. Uh, they're pricing. Um, we it's it's a, it's a feel. It's, it's more of an art than it is, you know, something it's more subjective than it is objective. Uh, you have we have seen practices that, that still, you know, charge $75 or $100 a [00:16:00] month for bookkeeping.

Annie Schwab: Wow.

Andres Costa: That same firm may have a 300 or 400 or a $500. And so, uh, we know that we can't pay a lot for all those smaller clients. Sure. Um, so, uh, again, I wish I could give you the perfect formula, but it it is very, uh, specific case by case. Sure. Yeah.

Roger Harris: Yeah, well, perfect [00:16:30] formula would only apply if there's perfect firms, which there probably aren't. Yeah.

Emily Goodman: Correct. Correct.

Andres Costa: But I'll go back to the fact that you're either buying clients or you're buying a business. Which one is it that you're buying? And if you're buying a business you're going to pay you're going to pay more. If you're buying clients, then it depends on what you think you're going to retain after the sale.

Roger Harris: So you talk about these things. So you identify a firm, um, [00:17:00] what kind of due diligence do you do to find out the answers to these questions to see some of it's obvious. You can just look at a listing and see how many employees or what revenue is and client mix, things like that. But when you identify a firm and zero in on one, what what does your due diligence process look like to go in and evaluate? Number one, is this a firm I want to move forward with?

Emily Goodman: I know for me, when we sit down with that owner, if we [00:17:30] can get a meeting, get in front of them, um, I drill down into the employees first thing. You know, like you said, we have the numbers. We have all those things. I drill down into what the employees know, what they don't know, what tasks that they're taking on, what they're taking off the owner's plate. What do they bring to the party? Um, I look at whether they get along or not at all. Yep.

Annie Schwab: Teamwork, culture, all that.

Emily Goodman: Absolutely. We at least I do. Yeah. [00:18:00] You agree to that. We focus more on the employees than anything else. Um, because.

Andres Costa: The other thing.

Emily Goodman: Is grown ups.

Andres Costa: Sure, sure. But the other thing for me, for me is seeing what industries they're in. Mhm. Because if there are similar industries to me, I know I can walk in there and talk to talk, whether it is a used car dealership or a dental practice or a mechanic. Uh, that I've, that I do have on board already and it becomes a lot easier. And of course we're [00:18:30] going to repeat the word fees. That four letter word that we have to that has to has to be, uh, you know, front and center all the time.

Annie Schwab: Their salaries to if you're planning on keeping them on, you know, are they are they happy. Are they are they being paid a fair salary? Maybe they're being overpaid. I don't, you know, I'm sure you see all kinds of. Yeah. Or the longevity like you know, are they are half of them ready to retire. Um, those kinds of things.

Emily Goodman: Looking at all that. [00:19:00]

Andres Costa: The other thing is, when's the last time you signed up a new client? How many new clients have you signed up in the last year?

Roger Harris: Okay. To see whether there's a growth mindset. So, Emily, you mentioned employees. Uh, one question. We get a lot about that. Um, how important is it that the employees, particularly if they have a good bit of client contact as part of their job is them either currently being or willing to sign with you a non-solicitation [00:19:30] non-compete agreement, since they might know more about the clients than you do.

Emily Goodman: They absolutely should know more about their clients than I do, and I will rely on them to to give me that information and help me form that relationship. But I think maintaining and retaining your employees, that just helps secure that relationship, because I could change what I want over here with with systems. But if the [00:20:00] client feels like their point person is changing, you have a harder time retaining that client. So if I can keep the employee happy, that means I'm keeping the client happy. That that's extremely important. Important to me. We've had one of the buyouts where we had an employee or soon to be employee that we knew immediately was not going to be a good fit in our culture. I have to, you know, not only take care of these [00:20:30] new employees coming in, but my team already that exists over here, right? The culture that we've created. So we knew that this person would not fit within and we had to let them go immediately. Um, because I, I have to make sure we work together as a group. If I don't have that, then I, we really don't have anything. So when we bring those employees on, we get in front of them, we let them know, you know, some things will change the systems, the operations to a more updated price process. But we [00:21:00] hope that the balance with offering flex time, offering to work from home, offering those things, we always give them a slight time.

Andres Costa: Yeah. Every time there's been a slight bump in pay.

Emily Goodman: Just that, you know, I got you guys. I want you here for the long haul. I need you guys more than I need these clients. Because, again, we you you by the clients and you have them come in, but some of them will leave you. Some of them you want to leave you. Which is why it's important for him to go out and be selling. Replace them. I'm calling [00:21:30] to replace all the ones we don't want. And I think that's a bigger conversation with talking about when you acquire and what we look for. So if you get the monthly guys the list and their fees, if a majority of them I, it doesn't even really have to be a majority 5,060% of them. The monthly fees are on point and these other ones are low. We could work with that. Um, I think that's important to recognize, [00:22:00] right? No doubt, no doubt. Um, what we've learned about clients in takeover with in in relation to their fees. I spent so much time trying to save very low in And clients in the first takeover. I don't even do that now. So, um, you know, 200 clients. The reason that the fees have never gone up, the owner will say, well, I have, they won't pay it. So I've [00:22:30] put a lot of time and effort to get them to like us, to get them on our side, just to raise them even $50. Eight, nine months down the road and they lose it.

Andres Costa: Okay, so buyers and sellers both need to understand something is that when a buyer is going in there, I know that this is fundamental, but I've got to say it buyers the the client has no say so in this transaction. No. So and the seller needs to understand [00:23:00] that they have taken a choice away from their client. So that inherently it doesn't matter if you have a client. I've seen it I've seen it. A client that's been that is grossly undercharged A new a new owner comes in many times that client would rather go down the street and pay going prices market price than for the choice that have been taken away from them. So a seller needs to understand that that's an inherent issue [00:23:30] when you're selling, and a buyer needs to understand that as well. We've experienced it. It doesn't it doesn't matter what you do. And you know, you stand on your head, you you do the dog and pony show. You've taken that choice away from them.

Roger Harris: Oh yeah. And and again, most clients, what I have found as being both a buyer and a seller, and I've always jokingly tell people when you're a seller, you think you're the most important thing in those clients lives. When [00:24:00] you sell, you realize what they really wanted was good, consistent service. They might like you, but you're not near as important as them getting what they need to run their business, run their life, whatever the case may be. And if the buyer steps in and provides those things, most of the time the clients aren't going to look. You mentioned a minute ago, Andreas, how difficult it is to go organically find a client because they don't like to leave unless they have to. So if you think that way. But sellers become very [00:24:30] possessive of oh, my clients won't like this, my clients won't do that, my clients won't do this. Well, yeah, they probably will. You know, they won't adapt technology. They won't pay more. Yeah. You've never asked them, so you don't really know. You're absolutely. You're doing this based on your perception. So you have to go in and reasonably make the changes that are necessary for your business to be successful. And yeah, some are going to leave. That's just a yeah, that's just a fact.

Andres Costa: And I mean, believe me, we do everything as far as and we [00:25:00] think we're likable. Maybe some folks don't like us.

Roger Harris: I think I think you got that one.

Andres Costa: But we think we're likable. And we try to make that. We try to make that connection immediately. But but again, you know, folks come in different. Yeah. With different characters that that don't necessarily jive with with us.

Annie Schwab: How do you how do you maintain the connection with all of these different offices, all of these different employees, all of these different clients? Do you feel that you I don't know, there's [00:25:30] got to be this big umbrella of like, how are you making sure that the ball is not dropping anywhere and you can't be in five places at one time? So we understand.

Andres Costa: We followed somebody that you put in front of us just with a one sentence. Buy back your time.

Emily Goodman: Oh. Mhm.

Annie Schwab: Yeah.

Annie Schwab: Yeah.

Emily Goodman: Okay. Yeah.

Emily Goodman: System system system systems and

Andres Costa: And.People.

Emily Goodman: And people.

Annie Schwab: And people.

Emily Goodman: So what we [00:26:00] learned in the, the purchase of the third practice that we bought, um, the employees great employees, but each of them were doing their own thing. Meaning like their journal entries all look different. And you know, they each had their own CRM and Excel spreadsheet or whatever they were using so that that didn't work for us. So it's it's getting everybody to do the same thing. What me and Andre like, um, [00:26:30] from their journal entries to conversations that they're having with the clients when it becomes an escalated moment to come up to us. Um, that's what I've learned to make this work and make sure that the ball is not dropped. Um, we rely heavy heavily on technology and texting clients. Clients love to text us, so we have software that the [00:27:00] whole entire team can see. So if we feel like conversations going off track, we can we can jump in. Um. Where we're at now in our journey looks so, so very different than it did even two years ago when we bought that that third practice. Right now we're learning and stepping back more and saying, we can't be in that every day. I have to trust the team that we have.

Roger Harris: Have their.

Emily Goodman: Have their and trust the processes that I put in place [00:27:30] that, that they're going to do the the best that they can for us.

Andres Costa: Well, I don't want to sound arrogant and maybe we're going off track here when we're talking about purchasing.

Roger Harris: We have no track. We can go wherever we want.

Andres Costa: But, um, uh, when when you have 5 or 6 folks working for you and, and you have an agenda yourself that you have to get done, but all these folks are asking you questions, you know, three, 4 or 5 times [00:28:00] a day. You you find that, okay, I'm answering all these questions to this, to the staff, but I can't get to my work. And that's the quintessential thing that Dan Martell described, which we were. I was just stuck in there and we had to make the decision. Now, another one of those things in acquiring a practice is you might find that person that can supervise or be the leader for your staff, so that that's that's [00:28:30] one thing that you need to be looking out for. We, you know, went out on a limb and hired hired very well to be able to step away from that every day. Why? Because for us, it's been okay. What are what am I going to do with my time? Well, I'm going to go out there and look for new clients, look for new firms. Um, and so that's that's where we're at right now. Uh, the tax side is a whole story, a whole different story that we're probably going to get into later on in this conversation.

Annie Schwab: But so I [00:29:00]will say there are probably some office owners, business owners that have really struggled with like giving up the control. You know, like not being part of every single, every activity of the day. And I think it's hard, um, to, you know, especially for, you know, you have you don't want to let anybody down. You don't want to let the client down, don't want to let the employee down. You don't want to let down your existing employees, but you also have to be able to delegate and let them do their job so [00:29:30] that you can focus on other things.

Annie Schwab: And I thin that's something that's so important.

Andres Costa: I learned this from experience, which is if we all, as a firm, were to take care of our clients 1,000% and not pay attention to anything else, regardless of what we do, those clients are either going to move away, they're going to go away one way, shape or form. I don't care what level of service you're going to provide. Correct. They're going [00:30:00] to.

Annie Schwab: Eventually yeah.

Andres Costa: Move away. They're going to do whatever. So I learned that if you do that and you don't pay attention to anything else, yes, there is the referral side of the business that really works for us. But there is also the part that says, I can't just sit here and wait for things to just go away. I have to do something about it. So so the fact that I need to go spend time outside while the work is really getting done in here, that's that's where Emily [00:30:30] has come in and put order to all this. But she couldn't do it by herself either. So having the, you know, you asked, how do you scale, how do you do this? And it's and it's systems and people.

Emily Goodman: Systems and people.

Andres Costa: So it's and money it took money to do it.

Roger Harris: Oh sure. Yeah. It always takes money.

Annie Schwab: Nothing's free.

Roger Harris: Yeah.

Emily Goodman: And that.

Emily Goodman: The the employees that we have acquired, it's seen certain characteristics in them that I've been able to unload a lot of tasks [00:31:00] that I used to do on them. So this about to be fourth takeover I it that this is going to be easy. Well well last one because I don't have to do as much with it. Um, and it's just because we have people in place.

Andres Costa: We pride ourselves like we pride ourselves in being a boutique shop. Right? So we're taking clients, but you also have to step back, and you also have to balance that boutique with being commercially viable. [00:31:30]

Roger Harris: Right? Well, systems are hugely important. And and yeah, whether you have one firm or ten, um, having the system that can run with different people being put into it and that's where you get the, the efficiencies, that's where you get the low cost compared to others. That's where you get the owner out of it, where they're not completely the whole value.

Andres Costa: There's a hopper. There's a hopper that we constantly have to throw in new [00:32:00] prospects. You know, new clients because naturally, on the other end, it's going away. And of course, a shortcut would be an A, and a much more efficient way is to purchase a firm.

Roger Harris: Yeah. Yeah.

Emily Goodman: And let's say, you know, so let's go back to that. And the whole topic at hand is, is purchasing firms. And you know, the first firm we paid one times revenue for.

Roger Harris: Right.

Roger Harris: In cash because that's what I wanted to get to.

Emily Goodman: In cash.

Emily Goodman: It was three different [00:32:30] payments um throughout 18 months. But that that's how it was structured. Um, the second deal was, uh, 30% of collections.

Roger Harris: Over a period of, over a period of years.

Emily Goodman: That was a very small, very small firm. Um, and then the third one we learned we're going to we're going to pay off collections, period and from losing [00:33:00] clients. And I hate to this is this is what's hard to explain to the sellers that when somebody new comes in, if your systems are not updated, if you don't have good margins and you're going to lose half the clients when you have such a data practice coming to a modern practice that we've built, they will not like it. So when we talk about client retaining clients, and we are convinced that you're going to retain [00:33:30] 50% of them because the other 50% have such low fees you don't want to work with. We've tried. So out of the gate we we cut those people off. We send them letters that says your fees are going to go to here. So they they go away before.

Emily Goodman: Yeah. So we have a chance to onboard them or do anything or.

Annie Schwab: Spend the time.

Emily Goodman: Yeah. No it's it's just.

Roger Harris: But that's why the terms are so important. [00:34:00] Because you if you did that in a cash deal, you would take the entire hit. When you send those letters out and they all go away. So you've structured another form of terms that protects you when you have to go in and make substantial changes. And I guess that's a question for a listener out there, or whether they're a buyer or seller, to understand that price and terms kind of play off of each other. Yeah. And we can talk about a $300,000 firm a lot of different ways [00:34:30] for me to give you $300,000 in cash. It's got to have all the elements that you're talking about in perfect and the owner not being the draw so that you're not concerned about a huge loss of clients. Yeah. If if it needs to be modernized or prices need to be adjusted, the seller is going to have to be part of that process by giving you terms that allow you to come in and do the things that you know need to be done. So this may be a message more for people [00:35:00] who are sellers than buyers. Get your firm in order. Because I've told a lot of people this, these are going to be raised. The question is whether you do it or the buyer does it.

Emily Goodman: Yeah.

Roger Harris: If you do it, you'll get paid for it. If they do it, you won't get paid for it. So don't delay that.

Emily Goodman: Absolutely.

Emily Goodman: And I think when you do the due diligence, it's important not just to look revenue and revenue. What these firms collect, it's important to [00:35:30] us but not as important as that bottom line number. That's what we always gravitate towards. Um, we've looked at firms where the owner was actually making less than the employees. And so if you put in that debt service in there.

Andres Costa: There's nothing.

Emily Goodman: Why would we take that over?

Andres Costa: And so it's reflected in the price.

Emily Goodman: It's all reflected in the price which the fees. And that bottom line number means more to us than anything, because a lot of times.

Andres Costa: Offer for price is what I meant. Roger.

Roger Harris: Right? [00:36:00] Sure. No that's

Emily Goodman: Any firm under 500,000? If you're like us, if we are the buyers looking at that, we know that that job of the owner, we're going to have to place it with an employee, you know, because we don't want to do it. Once you add that employee in there and then you add in that debt, there's nothing for us. Why would we take that over? Right. And that's where the the I mean.

Andres Costa: It sounds very harsh, but it's, it's it's reality. It's [00:36:30] it's what a what a prudent person would do. What would a prudent person do.

Roger Harris: Oh sure.

Annie Schwab: Yeah.

Roger Harris: I'm going to describe a firm that probably looks like a lot of our listeners. I'm a $350,000 firm. I'm the owner of it. I do all the tax work, I do all the client contacts. I have one employee who does some administrative and some behind the scenes work. 350,000 in annual revenue. What's it worth to you guys?

Andres Costa: I would I would offer [00:37:00] a $50,000 cash and then, uh, and then you'll you'll you'll know why I'm saying this. And then, uh, 25% of collections over the next two years. Two years?

Roger Harris: Yeah. And why is that? Why is that firm I described? Because clearly that's not a great offer. Yeah, that's a fair offer. But from the seller's perspective, it's not a great offer. What what sent off alarm bells to [00:37:30] you?

Andres Costa: The $50,000 says you're serious.

Emily Goodman: Yeah.

Andres Costa: First of all,

Emily Goodman: You need to do that.

Andres Costa: And you have skin in the game. And if if it's a good number of clients that that will stay because they've been treated the right way, we know we're going to treat them well. Right. So, uh, 25% of of 300 okay times two is is, uh. How much? 150,000.

Roger Harris: Probably. Yeah. Okay, honey, stay.

Andres Costa: So we essentially would be paying [00:38:00] 200,000 for that practice. And, um, that's where we stand in our journey right now.

Annie Schwab: Mhm.

Andres Costa: And so it may be different. That's why you know buyers and sellers need to, you know the classic what is something worth what a willing buyer willing seller or willing to agree upon. So that's what we're willing to do. Not knowing anything else about that scenario of that $350,000, 300,000.

Roger Harris: But what the seller's got to understand is all the work is being [00:38:30] done by the person who's leaving.

Emily Goodman: Absolutely. And that's what I was just going to comment on that. So when you have clients that are used to going to the owner for everything, and I shift them to an employee of ours, they for some reason feel like they're getting less services, but they don't have the owner when they don't have the CPA, when they don't have that in front of them as their point person. That is a hard transition for clients, whereas my employees will do better than I do in servicing that client because their that's their only job. [00:39:00]

Annie Schwab: Um, nobody likes change.

Emily Goodman: Yeah.

Emily Goodman: So that's another thing to consider as us as buyers is looking where we're at in our journey now. Somebody coming in, you know, who's just getting started. But again, go back to that debt service that they have to if you could get an owner financing. Let's talk about that. Let's talk about owner financing.

Andres Costa: Owner financing changes everything. Yeah.

Andres Costa: And as a percentage of collection, you know, you're more apt to pay a [00:39:30] much higher price. Uh, if, if you can, um, if you can get some owner financing and owner financing, meaning to me, percentage of collections. Because at the end of the day, the quality of those clients is going to is is everything.

Roger Harris: So you you're sharing the risk. First of all, the buyer and seller both have risk in this transaction that it go well.

Emily Goodman: Yeah.

Roger Harris: So you're both motivated for the same thing. [00:40:00] Sure.

Andres Costa: And I mean the seller needs to trust that the buyer is in good faith going to do everything. And part of it is that, you know, of course you don't throw money. Uh, if you don't, if you're not planning on on putting all the effort in it. Uh, that initial down payment should represent something. Now, I know, because I've seen it is sellers that, um. Because everything you see out there. Go out there and any broker is, is is [00:40:30] showing out there 1 to 1.5 times an annual revenue. And that's, I mean, that's that's fair. That's a starting point to negotiate.

Emily Goodman: Yeah. You can always start there.

Annie Schwab: How long did the negotiations usually take?

Emily Goodman: Not long. Yeah. Um.

Emily Goodman: A month of back and forth.

Emily Goodman: Yeah. Yeah.

Emily Goodman: A month of back and forth. Um, we seem to upset people more.

Andres Costa: But, I mean, again.

Andres Costa: We're we're not monsters, and, um, [00:41:00] it's reality. It's what. It's what makes sense because everybody talks about revenue. But where's the bottom line? Where is the bottom line?

Annie Schwab: Yeah.

Emily Goodman: And then when we're. Because even moving forward today, if looking at firms to buy I've always picked that 500,000 and below.

Annie Schwab: Mhm.

Emily Goodman: I anything above that it gets a little dicier for me.

Andres Costa: Um no I mean.

Emily Goodman: Because of onboarding and our team, I don't want [00:41:30] to disrupt so much. And the bigger the more clients you get at one time it's.

Andres Costa: That's fair enough. That's.

Emily Goodman: Yeah. That's not for us. So I would rather take little bites, little chunks here and there.

Andres Costa: Yeah.

Roger Harris: Well, I think that's that's a good thing for our listeners to understand. Target the kind of firms both size. You mentioned earlier the blend of accounting versus tax versus other services. I mean, be a smart buyer. Don't just buy the first thing that comes across, you know, search out [00:42:00] for the firms that you want. And I'm I'm going to make one statement about brokerage. There's some good ones and there's some bad ones. And yes, they're going to put a cash deal. They're going to advertise a firm at one times, three times annual revenue in cash. Well, that's great for the broker because that means he or she gets all their money right at closing. That's not necessarily something that you have to say yes to. You can negotiate. The buyers are going to push back on owner financing. They're going to push back on percentage of revenue because that makes [00:42:30] their fee iffy. But just because a broker advertises that and says, we'll get you that, that's not necessarily what that firm is worth or what they will take. But remember, the broker represents the seller. And they're going to be potentially not, in all cases, adversarial to any of the kind of deals you're talking about, because then they got to figure out how to get them paid, which I don't blame them for. But that doesn't mean you have to fall in line with them.

Andres Costa: I [00:43:00] want to add something to the type of practice that we're looking for all the time. Um, so we've had all kinds of luck and that's, I think, across the board. I would love to get a lesson from the pageant practices that have successfully hired and retained tax preparers. Um, we're not one of them.

Roger Harris: That is a non-owner tax preparers or the owner? Yeah.

Andres Costa: Non-owner non-owner. Okay. Yeah.

Andres Costa: Uh, so in [00:43:30] our world, the way that we've been able to survive, because I know that there's firms that do hundreds and hundreds and even thousands of returns. And I know the owners are not necessarily doing it themselves. Right. So they've been successful at hiring, you know, folks. And for us, where we've had success is saying, okay, I know that if if we have 100 clients or 200 clients, monthly clients I'm talking about, or even 300 or 400, that's not that's [00:44:00] not a number that I can even wrap my mind around. We're not even close to that. But if you had if a firm got to the 300 or 400 monthly clients, guess what? At, if you only did the tax returns for those clients, that's manageable. That's actually manageable. And that would be a, you know, significant firm. But if you were to, you know, buy a practice that has monthly clients, that's that's a good thing for us. If it has a disproportionate amount of [00:44:30] individual tax returns, then that that doesn't fit us. Because given that we're the ones having to do the returns, we're we're limited to how much?

Roger Harris: How many returns can you do? How much can you do?

Andres Costa: So that that that's how we've been able to manage is we don't do as many tax returns, the individual tax returns that continuously come. Yeah, we'll take them to a certain extent. But our focus is on the monthly clients that we have.

Roger Harris: Right. Yeah I think one of [00:45:00] the things that people don't understand, that there is a direct relationship between how you price and how you hire, because sometimes people have a hard time hiring because they don't have the funds to hire the people they need, because they don't charge the clients enough to provide those funds.

Emily Goodman: The vicious cycle.

Emily Goodman: Right?

Roger Harris: Yeah.

Roger Harris: And they blame it on the market of hiring. But really, the reality is you're undercharging and a good tax preparer is going to cost more than you can afford, and you're going to blame it on the scarcity of the people. But [00:45:30] but that's what they're worth. You need to charge, you know that's a cost of goods issue. In my mind. That's a cost of what it takes to run my business. And I need enough money to be competitive in hiring good tax preparers.

Andres Costa: And that's maybe our problem is that we haven't nurtured the whole, uh, individual tax filing side of the business. And what we should do is, is hire well, and let that side of the business run itself, even if we're not making any money until we we can figure out how to price correctly [00:46:00] and whether that person's going to be a career person with us. Yeah.

Roger Harris: Well, when you're buying a firm, you're inheriting their pricing for some period of time. So you're inheriting that problem that doesn't necessarily give you the money initially to upscale the hiring of a tax preparer. But you've got to get to that point. Then you've got to leverage the outsourced help that you can get. And, you know, there's just it. We all want to look for the one thing that solves the problem. There's probably 4 or 5 different [00:46:30] things. But I think ultimately you being out of the tax prep business is best for what you're trying to do because you've got so many things to do. It limits the number, but you need good, qualified people. That means it's going to cost you more. That means you've got to charge more. That's the thing.

Emily Goodman: That's kind of what this this next purchase is about is getting that that more revenue in to help us, because we're at the point now where our tax returns are getting, you know, we're we've hit the 400 [00:47:00] mark. And so I was like, we need to get somebody else in here because I'm doing too many.

Roger Harris: Yeah.

Emily Goodman: But you did touch on something, Roger, about uh, the fees, inheriting fees. And I think that's. Let's talk about that. Um, in each of the acquisitions, we chose different times, timing on when to raise fees for clients. But the question is, do they get to know you first and then you raise fees? Do you raise fees out of the gate? Um, [00:47:30] do you wait a year or so? What's best? And we've done it all different ways to see what works best. Um, in my opinion, what I like to see is if you have if if the if it seems like the client's monthly fees are at least covering costs for a while, leave them alone. Let them get to know you. Develop that trust.

Annie Schwab: Build a relationship.

Emily Goodman: Yeah, I like around eight month mark, one year mark to go in and raise them. I think that anybody below a certain threshold that you have [00:48:00] to pick that threshold. But for us right now it's at $250. Also mess with the $300 monthly client, you know, and develop a relationship if I think I could get them there. But that that lower end get rid of them, they're not worth it out of the gate. I really do think that, um, so that I get that question a lot. When did you raise the prices? When did you do you do it immediately to me, I say, no, that's just me.

Roger Harris: Yeah, well, I think I think again, this is another [00:48:30] one of those where. Well, every answer in our business seems like it starts with it depends whether it's a tax question from a client or this. But I think you go back first of all. So what is the terms and price of this deal. If it's a cash price like you did the first one, you've definitely got to be more cautious in raising fees because you're paying for that client whether they stay or not. Yeah. If you have a percentage of revenue, you can be a little more aggressive because if the client leaves, you don't have to pay [00:49:00] for it. So that's why I think it's going to depend on what your what your structure is. How much of an increase are we talking about? Is it a good thing to lose clients, to create capacity for bringing in better clients? So I think yeah, I think sometimes you just have to say, let's sit back and analyze this firm, our terms, our capacity. And, you know, again, I think we all have to accept the fact losing clients, unless it's a cash deal, isn't a bad thing.

Emily Goodman: Mhm. [00:49:30]

Roger Harris: Um, because if you're doing it as part of an overall increase across the board, usually what's going to happen is you're going to have more revenue and less work because you're going to lose some clients, but those that stay are going to cover that their cost as well as the new people. But I think it depends on your structure and your deal. And, um, a lot of things. I mean, that's why I think this is such an interesting topic because it's not. Here's three things. If you do these three things every time, it'll always work.

Andres Costa: Yeah. [00:50:00]

Andres Costa: No.

Emily Goodman: And it's you know besides the fees then you're talking like go, go a little bit deeper on. When do you move the processes in your systems. When's a good time to do that. And I my answer to that would be it depends on the time of year. Honestly. Um, if we close on January 1st, I learned the hard way. I'm not going to spend the first part of the year trying to move clients to zero, trying to get them on ADP, moving them to our systems. Yet let's get through [00:50:30] tax season and then worry about that. I've learned that the hard way. So that's just as important of timing. When you when you do those things.

Annie Schwab: And the technology that you're acquiring to.

Emily Goodman: Yes. Yeah.

Annie Schwab: They could be under contract with certain softwares, certain technology they may be well versed in, you know, this type of.

Andres Costa: How resistant are the employees going to be to change.

Roger Harris: Right. Because they got to learn too.

Emily Goodman: Well, that's that's that due diligence that you're looking for whenever you sit down. And I ask a bunch of staffing questions [00:51:00] because.

Emily Goodman: That's that's where my concern is, is developing the team back here and what they can take off my plate, given their experience and how much contact they have with the client, because it's surprising how many firms that you've talked about three, 50 and below, clients aren't even aware that they have employees. No. They and and so that's it blows my mind.

Andres Costa: Well, it wasn't that long ago where we had an employee who didn't have email.

Emily Goodman: Yeah. [00:51:30]

Annie Schwab: Wow.

Emily Goodman: Okay. When? When? Yeah. And that was why I do such a heavy, deep dive into the employees. Because we thought we did. We asked all the questions. Yes. You know, they know this. They know that they. But come to find out, they don't even have an email. All conversations were happening. Well, no. Via phone?

Andres Costa: Well, yeah.

Emily Goodman: Via phone.

Annie Schwab: Oh, yeah.

Emily Goodman: An email etiquette. And that's that's actually a harder thing than you think. [00:52:00]

Annie Schwab: Soft skills with employees are really important.

Emily Goodman: Very important. We're we're doing that right now, actually.

Annie Schwab: Um, yeah.

Emily Goodman: Just so that goes back into how do we not let things slip through the cracks? How do we know that the team is doing the best? It's.

Annie Schwab: Yeah.

Emily Goodman: Constant training, constant trying to get better. Um, but that's more of a processes systems question than than buying out. Um, I'm trying to think of, of big things in here. Owners, [00:52:30] the, the sellers, we actually prefer not to have them involved.

Roger Harris: That was the next question. That's the question you get a lot. What do I do about the owner? Uh, you know, do I keep them on?

Emily Goodman: Yeah. I think that I've heard more horror stories about the owners staying in than not. Um.

Annie Schwab: Oh.

Emily Goodman: That's just me. I, I prefer just to have the old owner out, get to know us and and move on.

Roger Harris: Yeah. I think the owner's main task in [00:53:00] any of these is to help the transition of informing clients, giving clients encouragement to stay with you guys in this case. But if you keep them around, the employees are going to always go to the owner. Well, they want me to do it this way, you know? Yes. You know, eventually they're going to they can become a problem unless you need them to do the work, like if you need them to prepare taxes for this tax season.

Annie Schwab: Or stay in for the tax.

Roger Harris: Year or something like that. But for the most part, my advice has always been make sure they do the transition properly, help you maintain [00:53:30] the clients, and get them transferred to you. Tell them what a great person you guys are and why. This is the greatest thing in the world for everybody. And then leave. Get out of the way! Um, but I want him to leave friendly. Because I do know this. If a client gets frustrated with you guys, who's the first person they're going to call the owner?

Emily Goodman: Yeah, absolutely.

Andres Costa: So another thing. There's another thing that we don't ever talk about, but is the records that come along with buying.

Annie Schwab: Right? Right.

Andres Costa: Um, we've got, [00:54:00] uh, storage units everywhere.

Annie Schwab: Oh, gosh.

Emily Goodman: We have locations everywhere. We do have storage units, um, paper. Um, because the the there are data practices that we bought. So everything was on paper. They're just sitting there collecting dust, and we're just waiting for the time that. Yeah, we can shred it. Yeah, to come out there and do it. So but that's a us being all scattered around. Right. Different locations. [00:54:30] But um.

Roger Harris: We like that's actually funny though. I can run the business without an office, but I gotta have a place to store all the old records.

Emily Goodman: Yeah.

Roger Harris: Yeah, yeah.

Emily Goodman: Yeah. And every, every office that we have acquired had a physical location. We do have a physical location, but we all work from home, like the office that we're in now that we very much take advantage of. We work type spaces. Um, [00:55:00] but, uh, every office that we have acquired.

Annie Schwab: Um.

Emily Goodman: We moved them to a digital firm, and it's it's been fine. It's been fine. And you hear that? All my clients won't do that. Like Roger said, my clients, you'd be. Let them make that choice.

Annie Schwab: Yeah.

Emily Goodman: They let them make that choice. We almost lost a deal because the old owner was convinced that they wouldn't go digital. They wouldn't. You know, we haven't [00:55:30] had any issues.

Roger Harris: Well, you couldn't go six hours from Nashville if they didn't go digital. I mean, if you had to physically be in place, you know, in an office five days a week, three days a week, that shrinks the whole market significantly, because now that six hour drive has probably got to be two hours.

Annie Schwab: Yeah.

Andres Costa: So I don't know how close we are to the end here. But, um, back again to the pricing of clients that you currently have. If you're a seller, a and you're still doing [00:56:00] very, very low monthly fees or very low tax fees, you're if that works for you as far as you don't have any expenses and those things, you're still making a good margin on that. That's fine. But God, honest truth is you're not going to get anything for those.

Annie Schwab: So yeah.

Andres Costa: You're you're.

Annie Schwab: Not really doing yourself. You're doing yourself a disservice actually.

Andres Costa: Yeah, yeah. And that's not easy to do, especially if you had a client for 20 years. And the slap in the face that I recognized [00:56:30] here in the last year, I don't know if it was something that Padgett put together, uh, or I don't know where it came from, but it said if you've retained clients for a very, very, very long time, that's not necessarily a good thing because chances are you haven't raised their fees accordingly. And therefore, a client that you sell today, you're going to sell them on a much higher fee than the client that has been with you ten years.

Roger Harris: Oh, it's always true. Yeah.

Annie Schwab: Yeah. [00:57:00]

Andres Costa: The chances are is that you haven't raised those fees. We're guilty of that as well too. And we're trying not to, but yeah.

Roger Harris: Yeah. Anyway, no, no that's why I've said if you're if you're not too expensive for somebody, you're too cheap for everybody.

Annie Schwab: Yeah.

Emily Goodman: And one of the things that when the, when the sellers, the one piece of advice that I would give not just pageant owners, but any other firm owner, if you're looking to sell in the next year or two years, [00:57:30] two years, whatever that goal is, if you're under 500,000, at least for us as buyers, I don't care so much about what technology use because in today's world we can get it moved to whatever we want. I care more about the fees and the employee. If you have an employee, their interaction with the client and where that sits. So I think if you're looking to sell over the next couple years, that's what you should focus on. Don't worry about, you know, crowding up your overhead with all these different software over here because I'm [00:58:00] going to move them to mine anyway. So I don't really care what you use. I care about what you're charging the clients, and I care about how much your employees know. So I think that's where your attention should be.

Andres Costa: Well, certainly.

Emily Goodman: An easier.

Andres Costa: Larger practices are a whole different story because a larger practice is going to come with staff and it's going to come with systems. And so whoever is buying a larger practice is going to, again, return on investment. They're going to be more passive owners than they will active in the business as we are. [00:58:30] Yeah.

Roger Harris: Well, you guys have done a great job of moving to what was going to be the last section, which is advice to people that are out there listening. Uh, anything else in terms of final advice, what would you tell a person out there focused primarily their buyers? But I think if you speak to buyers, I think you're indirectly speaking to sellers.

Emily Goodman: Yeah, absolutely. I think that, yeah, it's because I'm constantly thinking of if we ever want to sell, are we sellable?

Roger Harris: What do you have to look like?

Emily Goodman: And that's [00:59:00] that's a whole different road. But I think if anybody's thinking about acquiring a firm, you know, just I think fear gets in a lot of people's head. Go for it. You know. Go for it. Do it.

Andres Costa: Um, you may have to figure out things as you go along, because you sit there and you try and pre engineer it. Um, you're you're just going to scare yourself to death. Yeah. And, and then from a buyer's from a seller's standpoint, don't be offended. Let, let an offer be something that a point to start negotiating. [00:59:30]

Annie Schwab: Right.

Roger Harris: Uh, but don't wait and think that somehow you're different. The issues that you guys have talked about are going to be true. If you're underpriced, you're going to get underpriced. When you sell that underpricing translates into an underpriced offer. You know, thinking one times revenue one times $20 is not the same as one times $250.

Emily Goodman: Yeah, absolutely.

Andres Costa: Yeah. And and look inward and look inward and be honest with [01:00:00] yourself. Um, you know, you can sit there and say, you want this much, or even, you know, from both buyer and B. Look inward. What is it that you want as a buyer and and be realistic as a seller.

Roger Harris: Right?

Andres Costa: Be realistic. Would you buy this yourself?

Roger Harris: Right. Yeah, I've, I taught a panel at the IRS tax forums and it was on practice management. And that's the first thing I told them. I said, I want you to look at yourself. Would you buy your own firm?

Annie Schwab: And if the answer is no, you need to fix your [01:00:30] you got problems.

Roger Harris: Yeah.

Emily Goodman: You might have to do some correcting.

Roger Harris: Yeah. Annie, how do you want to wrap this up?

Annie Schwab: This has been great. I think this is a fantastic episode, especially at this time of year when people are thinking about, you know, what is going to be the next step. What are my New Year's resolutions? What are my short term and long term goals as the as the year turns over? So again, thank you so much. Um, I really enjoyed this and I hope our listeners, um, took away some, some key points. Um, and I hope that you guys [01:01:00] have a fantastic holiday.

Andres Costa: Thank you. Likewise.

Emily Goodman: Yes.

Roger Harris: Well, we'll have to get you back a year and see what you've learned in the next year of this. How many more years you're gonna. You're gonna learn a lot of things, and you're.

Emily Goodman: You know, we're on a every two year, every almost every two years take over. So. Yeah, we'll.

Roger Harris: Get you back. You can update and.

Emily Goodman: See where we're at. Absolutely.

Roger Harris: Alright. Thanks a lot, guys. This is great, guys. This is.

Emily Goodman: Uh, and.

Roger Harris: Uh, have a have a great holiday season. Uh. Good luck. [01:01:30] Continue purchasing. And, um, we'll have you back to get the new stories.

Emily Goodman: Yes, I love it, I love it. Thanks, guys.

Roger Harris: Thank you. Thanks, guys. Andy, thank you as always. And, um, thanks for listening. Come back next time for another federal tax update podcast. I guess we'll see you in 26.