Key Points From the Interview
ne thing Patrick Dichter noticed when working at a small business consulting company was that many companies have disorganized books — and what a disadvantage this is.
The first recommendation he usually provided to clients was to organize their books, a service that his company actually referred out. But by doing this work, Patrick saw how good bookkeeping habits were an essential way for owners to understand their business so they could develop new strategies.
Later, when Patrick felt the entrepreneurial itch and started the journey to buy a company of his own, he considered what type of business he wanted to acquire. Over and over, he kept coming back to bookkeeping. The more he learned about the profession, the more excited the work made him.
His search led him to New Hampshire-based Appletree Business Services, which today provides bookkeeping, payroll, and tax services to small businesses.
Admittedly, he had some hesitations at first. On the one hand, Patrick wanted to find a business that focused only on bookkeeping, but they were difficult to find, much less big enough to be worth the cost. He also had reservations about taking on the risk of providing tax services.
Then Patrick came across Appletree. After he talked to the owner, he felt more confident taking on those additional services. Evolving his criteria resulted in owning a bigger business and creating more value for clients, which made them less likely to leave. Patrick acquired Appletree Business Services in December 2021.
In this episode of Acquiring Minds, Patrick shares what drew him to the bookkeeping business, why industry brokers wouldn’t give him the time of day and how he worked around them, and his plans for growth while also making the company more efficient.
✳️ Top takeaways from the episode
✳️ Episode highlights with timestamps
Acquisition Entrepreneur: Patrick Dichter
💵 What he acquired: Patrick always had an entrepreneurial bug, but he didn’t believe he had the skills to start a business from scratch. After gaining experience in sales and digital marketing, he took a job at a small business consulting firm. There, he saw the importance of good bookkeeping: it provides you with a deeper understanding of the business and various ways you can grow it. Once Patrick decided he wanted to run his own business, he launched a proprietary search. That’s how he came across Appletree Business Services, which he acquired in December 2021.
💡 Key quote: “We'd start these consulting engagements, and most of the time we'd see really bad bookkeeping. It was out of date and kind of a mess. We’d always end up referring it out. And I had an itch to go buy a business. As I thought about different industries or B2B service categories, I just kept coming back to bookkeeping. The more I explored it, the more excited I got.”
Acquisition Tips From the Episode
Top takeaways from this conversation
📒 When you should buy a bookkeeping business and when you should build one from scratch.
Patrick always had entrepreneurial tendencies; as a kid, he started a small landscaping business. But as an adult, he didn’t see himself founding his own company.
When he decided he was ready to run a company and had settled on bookkeeping, Patrick briefly considered building a business from scratch, but, ultimately, he chose to buy a business.
However, that isn’t his advice to everyone.
He suggests if people come from a background in the accounting world, they should strongly consider building their own business. Not coming from that background, though, Patrick’s decision ultimately came down to his current position in life.
“A couple of reasons made me want to buy. Frankly, household cash flow. We have three young kids and just the ramp-up to get it to be able to support us — I don't know if I would have been able to do that,” Patrick says. “I thought that if I could buy an existing one, I could maybe add more value and move faster toward my long-term goals, and maybe save a few years and not burn out versus trying to build it from scratch.”
🔑 When the industry gatekeepers won’t let you in, find another way.
There are enough transactions, client lists, bookkeeping, and accounting businesses to warrant an entire industry for these types of brokers. There are several brokerages dedicated solely to this space, and they control most of the deal flow. Most of them wanted nothing to do with Patrick.
“I’d tried to build a relationship with a broker and tell them my background and tell them that I can grow the firm and I'll backfill the owner's time. And they’re just like, ‘No. If you're not a CPA, I'm not gonna present you to our clients. Go partner with a CPA and come back to me,’” Patrick says.
Despite the setback, Patrick was confident that bookkeeping was the right industry for him.
So he pivoted to a proprietary search model. As he began reaching out to businesses, he found that some owners were more open-minded to those who didn’t have an accounting background. That includes the owner at Appletree, the business Patrick ultimately acquired.
🔍 Operating and filtering down the numbers with a proprietary search.
After brokers blocked him, Patrick moved to a proprietary search. He hired a virtual assistant to build a list of bookkeeping firms. Then he focused on virtual firms and his target geographies. From there, Patrick created an email marketing sequence to reach out and engage with owners.
He sent 500 emails, which resulted in about 20 seller calls. Three of the letters of intent (LOIs) he sent out were from those initial calls.
While deals from brokers tend to be faster, for people specifically targeting one or two industries, Patrick recommends considering proprietary search. You have a chance of reaching owners who don’t want to go through brokers, or others who are considering listing in a year or two and you get to them before they list their businesses publicly.
🎯 Personalize and be direct with messaging.
Using his skills from sales and marketing, it didn’t take Patrick long to nail down the messaging he wanted to use for cold outreach. He recommends a direct subject line and pitch.
He kept the body of the letter, email, or phone pitch quick and to the point.
It said he was looking to acquire an accounting firm wherever their business was located, and that business seemed like a potential fit. He made it a point to mention his 10 years experience working with small businesses. He wrapped up the pitch by asking them to get in touch if, in the future, they consider selling the business.
“It was somewhat personalized—like location, your firm in particular—and just direct to say, ‘If you have any interest, let's chat.’ And the sequence was only three messages over two weeks,” Patrick says. “And…it worked.”
Inflection points from the show
[2:57] Working with small businesses in digital marketing, Patrick saw an opportunity in bookkeeping.
[4:41] The journey to acquiring a business.
[6:28] Deciding between buying or building a bookkeeping business.
[9:35] Industries other than bookkeeping that interested Patrick.
[10:25] Choosing bookkeeping, despite having a solid background in marketing and sales.
[12:10] The fragmentation in the bookkeeping industry.
[16:41] Why having clean books is essential to understanding your business.
[19:12] The difference between bookkeeping, accounting, and other tax services.
[22:04] Evolving criteria while conducting a business-buying search.
[24:01] Dealing with the restrictive world of accounting and bookkeeping business brokers.
[28:40] Breaking down the mechanics of his proprietary search.
[37:58] His background in sales helped Patrick develop the structure of his search, including messaging.
[39:23] What Appletree Business Services does and what Patrick loved about the business.
[41:07] The benefits of being part of an industry association where you can learn best practices.
[44:47] Getting into the numbers: Appletree and the acquisition.
[46:42] The differences between accounting firms and the way their costs and margins differ.
[49:27] Focusing on targeting specific industries to increase efficiency.
[51:01] Lessons learned after two months in the business.
[53:19] The importance of having a supportive seller throughout the transition.
[56:15] How being selective with clients leads to a more stable business.
Links & Mentions
✅ Cassi Niekamp on Acquiring Minds: Buying a $1.2m Fencing Business & Earning Trust Quickly
✅ Casey Clark on Acquiring Minds: What to Acquire: 3 Hot Sectors for Business Buyers
✅ Chris Williams on Acquiring Minds: Stay Open to the Many Flavors of Search