It’s amazing how quickly a task can sound so daunting and then after you have done it a few times you aren’t phased by it at all!

A company I have only just started working with needs an audit tender. I knew this before I started working with them and I wasn’t surprised to hear it (more on that later).

I was also amused as I remembered the first time, I was asked to this and internally freaked out.

I find this amusing now, because it isn’t a complicated process to execute, and it sounds more difficult than it is.

So, if you haven’t done a tender before and you know one might come or has come up, then read on.

I primarily work with founders who are pre or post a Series A fundraise and sometimes a Series B. And because I work with founders at this stage, I often see new Shareholder Agreements.
Fortunately, most Series A shareholder agreements don’t have an audit requirement included, but some do and a good few Series B agreements do as well!
I’ve also worked with founders who use an outsourced bookkeeping firm who managed all finance related activities including the annual tax return. However, once we bring this function in-house and the company starts to grow or get more complicated, then a new tax firm needs to be found.
So sufficient to say, I have prepared a lot of tax or audit tenders now!

So how do I get started?

Well, the first step is to work out exactly what is required.
For audit – which companies need to be audited? Is it just one company or the entire group?
Also, is there a deadline? When does the audit need to be completed?
Who is this audit for? Just the Board or all Shareholders?
For Tax – which companies do you need assistance with (therefore the tax tender may be for multiple appointments or one).
Which specific taxes need to be completed? Is it just the annual year end tax returns? Or payroll taxes? Sales taxes (VAT / GST) or advice around import and export duties?
R&D tax returns – is this to be included as well?
How much help do you need? Full tax support with tax planning and a close relationship. Or just a firm to do a local annual tax return for one entity nice and cheaply?
What is the budget for this cost?

Tender Document

Once the answers to all the above questions are made, then a tender document can be drafted. It doesn’t need to be long and complicated.
Ideally, just an introduction to the company. Then in point form I include what the company is looking for (from the research done above).

Which firms?

The next step is to work out who to send this tender document to.
I usually start with the Board and Shareholder Agreement. Sometimes (not often at early-stage companies) the Board or Shareholder Agreement has a preference. If this is the case, then start with those.
If there are no preferences, then ask your network for recommendations or even ask a firm or partner that you have used in a prior role who you really liked (as far as their work is concerned)
The budget may also be a factor - if quite restricted, then this may narrow down the pool of possibilities.
I usually include between 3-5 within this initial tender process.

Most firms will want to have a meeting before providing a quote
The firm will want to get a better sense of the company, understand the material issues so that they can quote you better. It’s also an opportunity for you to ask any questions as well.
For these meetings, I create a document with all the above initial company requirements down the side and then judge each of the firms according to the requirements.
The quotes will generally come through between 1-5 business days later. Once you have received all the quotes, it’s time to make a decision!

Decision time.

I don’t always go for the cheapest, as sometimes the main requirements are about timing (your deadlines and their availability) or experience (for example, a specific tax type or international experience).
I make a decision and organise my reasoning and then approach the CEO / Founders with my analysis. They can either agree or disagree and then it will generally need Board approval. Tax accountants may or may not, however the audit firm most likely will.

And then you can tell the firm the good news and the other firms the bad news. And don’t worry, firms understand that they’re in a tender process (they do them all the time!) and they never win them all, so just a short, to the point email is fine!

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1. Sign up to our next workshop.
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