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After the grueling tax season is finished, many tax and accounting firms decide to acquire new businesses or merge with others to strengthen and expand their practices. Mergers and acquisitions (M&A) offer great opportunities for CPA firms to expand their clientele base, acquire new talent, and increase the scope of their practices. However, the M&A process may hit some snags if problems arise during the security audit of IT processes, which can make or break a deal. With mergers and acquisitions more common in the tax and accounting industry than in previous years, this blog highlights why CPA firms should be on the cloud to make the transition smoother.
Perhaps somewhat surprisingly, 2020 was a very busy year for mergers and acquisitions of tax and accounting firms, especially those between $30 million and $300 million in annual revenue range. Revenues grew at an exponential pace for these businesses. In North America alone, the tax and accounting industry has a market share of 42.4% of the global marketplace, the largest in the world, and is forecasted to grow. In the U.S. alone, the tax and accounting services industry generated about $110 billion in 2020. An economic powerhouse, the tax, and accounting industry is experiencing more mergers and acquisitions than ever.
The M&A journey for CPA firms is often not without some logistical problems, particularly those dealing with IT security. Discovering security issues during the merger and acquisition process is a major concern for the parties to the transaction. When companies merge, the acquiring business has an opportunity to expand the IT footprint of the merging business, which can uncover weaknesses in their cybersecurity infrastructure.
As part of the M&A due diligence process, usually, a security audit is performed as well as during the transition phase. In many cases, compliance concerns may arise due to cybersecurity issues uncovered during this phase or shortly after the merger. More than one-third of companies discovered some kind of cybersecurity issue during the post-acquisition phase of the acquired company, such as a previous data security breach that can cause headaches, even reduce the purchase price, and possibly result in lawsuits. Not everyone working in the due diligence process understands the types of cyber threats that can be involved, so these issues may be overlooked.
Also, not carrying out a proper security audit can result in serious consequences. The organization may experience reputational damage, loss of revenues, financial penalties, negative customer impacts, violation of laws and subsequent litigation, loss of intellectual property, and more.
With any merger and acquisition, there will be some hiccups along the way. Yet, a cloud-based platform offers several important benefits for firms looking to merge or acquire another business.
Many C-suite executives have concerns over their firm’s ability to handle and adapt to the current threats within the cybersecurity industry, especially with mergers and acquisitions. Additionally, firms are always looking for ways to improve their systems and increase production. Cloud-based platforms offer a smoother, cheaper, and more effective way for CPA firms to choose how they want to merge their data, programs, operations, and infrastructure when merging or acquiring another business.
Fortunately, Cetrom can help alleviate these security concerns as well as enable a smoother transition during mergers and acquisitions. Cetrom is a leading cloud-based IT provider with the expertise and knowledge to prevent, detect, and combat cybersecurity issues. Our company heavily invests in the best-of-breed and most advanced AI security technologies on the market to help keep its clients up and running around the clock. We offer 24/7 customer support services as well, should a breach happen.
Cetrom’s expertise is focused 100 percent on CPA firms, and our cloud-based services host accounting-specific operations. Utilizing both a preventative and predictive approach for IT security, Cetrom’s services will allow C-suite executives the peace of mind to know their employees can effectively and securely work from an office or a remote location. Contact Cetrom today to learn more about how we can help answer your cybersecurity questions.
Cetrom Support fixed all of my problems, their engineers are very professional, courteous, friendly and very efficient. If all customer service out there was like...- Mid-sized