Introduction
Patrick Dichter, the new owner of Apple Tree Business Services, successfully navigated the complex world of bookkeeping business acquisition. Despite not being a CPA, Patrick identified an opportunity in the fragmented bookkeeping industry and executed a strategic acquisition that changed his entrepreneurial journey. In this interview, he shares his experience of acquiring a $1.2 million revenue bookkeeping business and his plans for future growth.
Founder Success Story QnA
Can you tell us about your background and what led you to want to buy a business?
I grew up in Colorado, went to undergrad and MBA, but I was not an accountant by trade. I took accounting courses and then went down a sales path. I sold door-to-door in college and really cut my teeth doing door-to-door sales. Then I helped grow a digital marketing agency after my MBA and we grew it from zero to 35 million in revenue while I was there. I loved serving small businesses during that time and then I joined a consulting company, Cultivated Advisors, a great small business advisory company and had about a three and a half year run there. What led me here was, 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 It was out of date and kind of a mess, and we always end up referring it out. I had a niche to go buy a business, and 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, and so I searched for about 10 months and ultimately closed on Apple Tree at the end of 2021.
Where did this entrepreneurial itch to buy a business come from?
I didn’t grow up with money. I grew up kind of lower middle income and I always had that entrepreneurial bug, but I never looked at myself as a founder type. I’m not a technical or software developer. I had a couple stints where I started a consumer product company or I started a small landscaping company growing up. I loved the advisory work that we were doing, but naturally you’re going to see some people that are doing really well and making great money and think maybe I could do that or maybe I could have more time freedom. So that’s where I came from. I think it was always there, and then in doing three years of advising, you see all these different businesses and you see patterns, and just getting to know what my strong suits are. My strong suits are sales and marketing, so feeling like if there was an opportunity to run with that, it could be a good one.
Why buy a bookkeeping business rather than starting one from scratch?
A couple 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. And frankly, I thought if I could buy an existing one, I could maybe add more value and move faster towards my long-term goals and maybe save a few years and not burn out versus trying to build it from scratch.
Why did you choose bookkeeping over other business types?
Bookkeeping, I saw just how transformative that was to a small business when they had good clean data and they started to understand their numbers. And frankly, I think the competition is higher in marketing agencies. I think there’s a lot of people that – it’s just frankly higher competition versus a little bit more like a cottage industry in bookkeeping. And what I saw with the firm I was at, a lot of other marketing agencies, you can do a great job and people just change their mind and stop doing marketing with you, right? Whereas it’s hard to leave an accounting firm if they’re doing a decent job. So it’s pretty sticky. And I also, the more I explored, I just saw there’s room for efficiency and there’s definitely some elements that are somewhat similar to SaaS. You can have a really good lifetime value of a customer, you get the recurring revenue. You don’t quite get the profitability as it scales, but there’s a lot you can build off of that accounting relationship. You can help with CRM implementation, you can do fractional controller work, fractional CFO work. So my long-term goal is ultimately to do other acquisitions and have a like a holding company, and I think accounting firm just sets you up for a better platform to do that from.
How did your experience at Cultivated Advisors inform your decision?
Cultivated does one-on-one advising, and I probably had like 40 to 45 clients myself during that time. That included a lot of professional services, a lot of marketing agencies, and then a lot of trades: cabinetry, drywall, remodeling, solar. So yeah, most of their clients are service-based businesses that are like zero to 10 million. And I saw that bookkeeping was a common weakness across these clients. When we’d start these consulting engagements, most of the time we’d see really bad bookkeeping – out of date, kind of a mess. This natural evolution happens where a business owner is scrappy, they’re looking down at their bank account, they have money in the bank account, hire a couple people, but they’re not looking at their financials on an accrual basis. They don’t know any different. So they might have books that they’ve done themselves or some individual doing their bookkeeping, and then they throw that over to a CPA at tax time and they take this mess and try to do their taxes and it’s a very reactive process. But if I met them at Cultivate and they’re 500k in revenue and paying themselves 80 to 100k, and they want to get to one, two, three million as an agency, I need to make sure we understand the profitability of each project, cash flow cycle, acquisition cost, how much they’re paying contractors. Suddenly to make those types of decisions and analysis, you need to have good clean books. So the light bulb would go off and it was an easy thing for them to understand – oh, this is why it matters now to really professionalize my accounting and financials.
How did you approach the search for a bookkeeping business to acquire?
There’s probably four or five brokerages that just cater to accounting firms, and none of them would take me seriously except one, PO Advisors. But I just could not get the time of day. I try 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 going to present you to our clients. Go partner with a CPA and come back to me. So I had a virtual assistant build a list of firms in the geographies that I wanted as well as virtual firms. Then I created an email marketing sequence and wrote the copy for that and used a tool to catch them via email. Then I also reached out to people in my network to try to get some referrals, people who had accounting firms or maybe already had fractional CFO companies and see if they knew anyone who might be selling. The first email batch that went out was like 70 people and I had like five solid replies and I was like this is easy. At the end of the day, I think I probably sent 500 emails. It led to 20 or so seller calls and three of the LOIs that I sent were from that, and ultimately the one that I closed was from my own outreach.
How did you handle being rejected by brokers because you weren’t a CPA?
I was pretty convicted in my thesis. It definitely like might have slowed me down a little bit. Even some of my own outreach people were like you don’t want to buy an accounting firm, and a couple people were like just go start a bookkeeping firm. But during that time, truly the more I explored it, the more grounded I got in my thesis that this feels like a really good place to be. I was taking bookkeeping courses along the way to try to just be able to speak the language a little bit. I probably submitted six LOIs, 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.
What did your outreach process look like in detail?
The contractor who built the list was a person from Upwork. I’d refer other B2B clients to them for list builds for some of the marketing and sales outreach that I’ve done with some other clients before. The email was really direct subject line and the body was short. It just said: “I’ve been looking for an accounting firm to acquire in California and Apple Tree seemed like a potential fit. I’ve been working with small businesses for 10 plus years and if you’ve ever thought about selling in the near future, I’d love to chat. Just reply and we’ll get a conversation started.” So it was somewhat personalized of like location, your firm in particular, and just direct to say if you have any interest like let’s chat. And the sequence was only three messages over two weeks, and yeah it worked.
How did you establish credibility with sellers during your first calls?
I think it’s just the little things like showing that you read their website and their bio and being genuine with connecting with them on how they built their business and why they want to sell, and show them that I had a plan to continue their legacy and grow the firm. It was kind of in my story like I did start here, here’s my background, I love small businesses, I spent time in consulting and I’ve just seen how important bookkeeping and clean financials are, and I want to acquire a firm and serve those small businesses. And then after the seller call, I would follow up with an email and say like great to meet you, here’s why I think I’d make a good person to sell to, and I would just keep the process moving along with them. It’s from my background in sales – reiterate, follow through, be direct. I know they’re busy, so I’m trying to stand out in their mind and keep it on the rails.
Tell us about Apple Tree Business Services and why it stood out?
Apple Tree does bookkeeping, payroll and tax for small businesses as a package service. So instead of that experience of like sending your bookkeeping to one person here and then sending it over to CPA over there, we do it all in one plan. What that creates for a small business is a more proactive approach that helps you get better financials that are more up-to-date and more clean. There’s cash flow planning that goes into that, there’s better tax planning that goes into that, and you have a team that you can lean on. What I really loved about Apple Tree is Steve, the previous owner, had three managers who are the tax experts and really run the client relationship, and then there’s staff accountants and payroll. Steve only had two clients that he was involved with anymore, and the 70 plus clients really had their managers as like their go-to person. So it was productized really well. It created better cash flow for the company and a better client relationship. And by productized, I mean clients pay monthly, it’s the same fee every month. We’ll look at it annually to see if it needs to be adjusted if they grew a lot, but yeah one flat fee.
What made Apple Tree different from other firms you looked at?
What I didn’t realize initially was that Steve had been part of an association called PASBA, and that’s an association of accounting firms that just serve small business. So I’m almost getting like all these best practices that you’d get in a franchise without paying a franchise fee. Within PASBA, there’s a few hundred firms and they share pricing strategies, what software works, job descriptions, growth numbers. Steve had been part of a mastermind, a smaller group within the association for 10 plus years. So it’s really he’s a super sharp guy and he’s done well, but a lot of it comes from just teachings from PASBA of like how do you train people, how do you bring in the right client, how do you get out of the way as the owner. When we closed in December, normally his mastermind meets every January, so early January I got to meet these people that he’s known for 10 years. I sat on the hot seat for two hours, gave my business plan, what’s going on in the business, and then I got to see all of them do it with their growth numbers and their profit margin and what their org chart looks like. It was pretty incredible when they went around and you saw everybody opened the kimono of their own businesses.
What are the financials of Apple Tree?
The business was basically doing 1.2 million in revenue the prior year and 330,000 in seller’s discretionary earnings. It was on a little bit bigger side of some of the ones that I came across. These businesses trade for usually between 0.9 and 1.5 times annual revenue, so I ended up kind of right in the middle of that. We’re only two months in but we’ve retained every client and the monthly recurring revenue is up 10% over last year. We’ve had our challenges but the transition’s been going well and I feel like I bought a really solid firm.
What are your plans for growing Apple Tree?
My goal is to get to 5 million within five years. One of the pivots I want to make is up to this point, Steve has gone to market geographically to say we’re the go-to firm in this area of New England. I want to go to market based on industries, which makes us service people all over the country. Ultimately I want to have four buckets, but the first two that I’m really going after are trades – you know landscaping, roofing, remodeling, flooring, HVAC – and then the other bucket would be professional services – marketing agencies, architects, things like that. I want to say if you’re a service-based business, either trades or B2B services, we’re your go-to accounting firm for people with 1-30 employees. I chose those buckets partly because of what I know from my consulting experience, and I just think you become more efficient and you get higher confidence from the client if you already speak their language. Because there’s so many things tied to the accounting stack, if I have a home service business and I say yeah I know ServiceTitan and I know Jobber, immediately you’re going to trust me. Or a marketing agency that says oh okay yeah you guys are using HubSpot, like we know the integrations and we know your pain points are on time tracking and we know Stripe integrations, things like that. So that’s the thought there is you can command your price better and become more efficient with the client.
What surprises have you encountered after the acquisition?
I closed at the end of the year right before the busy season, so one surprise has been just how slow I feel like I need to move and how cautious I need to be of the rest of the staff’s stress level around tax time. So I’m kind of sitting on my hands until May to make some of these changes. The other big surprise has been how narrow of a client we’ve been willing to work with up to this point. I’ve had some leads come in and because we do live payroll, it’ll be a company based out of Texas that has a couple employees in Ohio and Pennsylvania, and Steve will say no, we don’t want that as a client. It’s a total nightmare to do payroll in those states. Or no, we don’t want it because that person said they’re going to sell their business in 18 months, we’re not going to do a bunch of back work and then lose them in 18 months. So it’s frankly been really surprising to me just how many leads haven’t felt like a fit. The other big surprise is I thought tax would be more black and white, and it’s much more art than it is science. I’ve seen multiple times where two different CPAs can have just completely different opinions on what to do in certain cases. The last surprise frankly is how smoothly it’s gone. I was expecting just a lot more stress and chaos, and we’ve had some, don’t get me wrong, but it’s not been some of the nightmare situations that you read about or hear about.
How has the team responded to the new ownership?
They’ve been really positive and supportive, and I think Steve did a good job of selling them on that idea. He said I could have sold to a regional firm and they probably would have cut half of you and got rid of the office. Because Patrick is not a CPA himself, there’s not going to be a lot of change around here. We’re going to keep the same procedures, the same team, the same office, etc. And I’ve tried to build relationships with them quickly and make sure that I don’t change things early on.
Patrick Dichter Business Stats
Patrick Dichter acquired Apple Tree Business Services at the end of 2021, transforming his career through strategic bookkeeping business acquisition. The company has shown strong financial performance with consistent revenue and healthy profit margins typical of well-managed accounting firms. Below are key statistics that highlight the business’s current position and growth trajectory.
- Annual Revenue: $1.2 million
- Seller’s Discretionary Earnings: $330,000
- Profit Margin: ~25%
- Client Base: 70+ small businesses
- Team Size: 3 managers + staff accountants and payroll specialists
- Geographic Focus: New England (shifting to industry focus)
| Metric | Value |
|---|---|
| Acquisition Multiple | 1.0x – 1.5x Annual Revenue |
| Customer Retention Post-Acquisition | 100% |
| Monthly Recurring Revenue Growth | 10% (year-over-year) |
| Target Revenue Goal | $5 million within 5 years |
Patrick Dichter Method
Patrick’s approach to acquiring and growing a bookkeeping business was methodical and strategic. Despite facing industry barriers, he developed a unique method that identified opportunities others missed. His method combines sales expertise with thorough industry research and relationship building.
- Identified bookkeeping as a sticky business model with recurring revenue through consulting experience
- Conducted 10-month search process after developing conviction in the business model
- Bypassed industry brokers by implementing proprietary outreach to 500 firms
- Created targeted email sequences that generated 20 seller calls and 3 offers
- Established credibility with sellers by demonstrating industry knowledge and growth plans
- Prioritized firms with established systems and management teams to reduce owner dependency
Patrick Dichter Tools
Patrick leveraged several key tools and resources throughout his bookkeeping business acquisition journey. These tools helped him overcome industry barriers, identify opportunities, and execute a successful acquisition strategy. His approach combined modern outreach technology with traditional networking and industry associations.
- Email outreach tools – Used to send personalized sequences to 500 potential firms, generating 20 qualified calls
- Virtual assistants – Hired through Upwork to build targeted lists of accounting firms in desired geographies
- PASBA Association – Professional Association of Small Business Accountants provided best practices and networking
- Bookkeeping courses – Taken during search process to learn industry terminology and build credibility
- Professional network – Leveraged contacts from Cultivated Advisors and previous roles for referrals
Key Notes
Patrick’s bookkeeping business acquisition journey offers several valuable insights for aspiring entrepreneurs. His experience highlights both the challenges and opportunities in acquiring service-based businesses, particularly in specialized industries like accounting where credentials and expertise are highly valued.
- Industry barriers like not being a CPA can be overcome with conviction and strategic outreach
- Bookkeeping businesses offer sticky revenue models that provide platforms for expansion into other services
- Proprietary outreach can be more effective than traditional broker channels when faced with industry resistance
- Firms with established systems and management teams transition more smoothly post-acquisition
- Targeting specific industries rather than geographic areas can accelerate growth trajectory
Get Started in Just 5 Steps
Based on Patrick’s successful bookkeeping business acquisition, here’s a simplified five-step process that aspiring entrepreneurs can follow to identify and acquire their own service-based business. This approach focuses on overcoming industry barriers and executing a strategic acquisition.
- Identify a sticky business model with recurring revenue through industry research and consulting experience
- Build industry knowledge through courses, networking, and conversations with existing business owners
- Create a targeted list of potential acquisition targets using virtual assistants and industry databases
- Implement a personalized outreach strategy that establishes credibility and generates seller conversations
- Prioritize businesses with established systems, management teams, and growth potential beyond the current owner
Conclusion
Patrick Dichter’s successful acquisition of Apple Tree Business Services demonstrates that industry barriers can be overcome with the right strategy and conviction. His journey from sales professional to business owner highlights the potential of bookkeeping business acquisition as a path to entrepreneurship. By leveraging his strengths in sales and marketing, conducting thorough research, and executing a proprietary outreach strategy, Patrick identified and acquired a solid business with strong growth potential. His plans to expand from $1.2 million to $5 million in revenue within five years by focusing on specific industries rather than geographic areas show a clear vision for the future. For aspiring entrepreneurs, Patrick’s story offers valuable insights into how to approach service-based business acquisitions and transform them into platforms for long-term growth.