Grow or Go: 
Get an “Exit Organizer” for your accounting practice!

How are you feeling about tax season?
I mean next year’s tax season, 2027.

Like most owners of an accounting firm, you’ve survived another round of helping your clients solve their tax problems, maximize deductions and income despite all the crazy last-minute, crunch time work. After a little break, it’s a good time to review how to do an even better job next year.

We have found that for many owners of accounting businesses, as they look forward to the next “lap around the track”, it’s a good time to consider the possibility of selling their practice, to move on to another life chapter or opportunity, or even retire.

Either way there are a lot of reasons to get a business valuation and an exit plan in place before next year’s tax season, to take advantage of opportunities and not fall prey to circumstances outside your control.

Right now, there is high demand for accounting practices available for sale or acquisition.

Sunbelt Business Advisors and True North Mergers and Acquisitions have guided more than fifty accounting practice owners through successful sales of their companies since 2020. There probably hasn’t been a better time than right now for you to take advantage of the experience and expertise that can be applied to your decision to either grow your practice or move on to the next chapter of your life – Grow or Go!

Technology and Taxes: The changing marketplace.

Accounting is such a fundamental discipline. It is a practice that was historically reliant simply on the skills of smart, detail-oriented professionals.Over the last twenty years personal computing has simplified accounting, financial and tax work. This commoditization has pressed accounting businesses to expand into other areas to build their practices with the addition of services like tax and financial planning and investment support. Today, many of these services are also becoming more accessible and commoditized because of more new technology – like AI.

There is a great deal of accounting industry consolidation going on right now. Application of new technology is one of the key drivers in establishing the value of an accounting firm. Use of cloud platforms, automation and AI that boost margins and enable scalable, remote services, can make a firm more attractive. So, the owner of an accounting firm’s position on new technologies, and willingness to incorporate them into the business is a key decision that needs consideration.

We find some owners are not hotly interested in investing a great deal in new technology. This isn’t necessarily a shortcoming depending on the size of the practice and the needs of its clients. Taking a big technological step may not be the right one for a business owner at this time. But technology and its applications are a huge reason there is so much consolidation occurring in the accounting industry. The technology is already here – creating more reasons and opportunities to either enhance or sell anaccounting practice.

So, it's worth asking: Do you want to Grow or Go? Is now the time to keep building — or is it time to exit and move to the next chapter in your life?

And here's another question: If a well-funded buyer approached you tomorrow with a serious offer, would you be ready?

According to the Exit Planning Institute, while 83% of business owners claim to hold regular family conversations about transition, 70% have no formal exit strategy written and documented — and 82% don't feel fully prepared to execute a transition. That gap matters, because you are not always in control of your exit timing. Approximately 50% of business owners are ultimately forced into involuntary exits due to partner disputes, health events, death, disability, or financial distress. Planning for what may be inevitable is simply smart business.

Here’s why buyers would be interested in purchasing your accounting practice.

As agents for the successful sale of fifty accounting practices since 2020 – we offer significant experience for an owner to draw upon. These were all family- and founder-owned businesses, and the owners benefitted from our understanding of developing and current industry tailwinds including:

First. The fact that there are over 1200 accounting firms in the state of Minnesota alone. The industry is highly fragmented, which offers consolidation opportunities for buyers. Consolidation is driving premium valuations for the right accounting firms.

Second. Accounting firms have tended to offer more bundled tax, audit and advisory services, which generate more recurring revenue and loyalty. Firms with these services are even more valuable in the marketplace.

Third, as mentioned. Businesses utilizing cloud platforms, AI and automation enable scalability and capability for remote service can be very attractive for the right buyer.

Overall, the industry offers buyers sources of predictable, consistent, high margin and contractual recurring revenue streams. In many cases, an accounting practice also creates the opportunity for synergies by expanding into advisory and wealth management services.

An accounting practice can be an attractive target for the right buyer, in search of established, relatively predictable revenue and upside.

How is the value of an accounting firm determined by the marketplace.

There is no Kelly Blue Book for accounting practices, no simple answer. Valuation depends on profitability, client composition, operational structure, and current buyer demand. The good news is that accounting practice valuations follow recognizable patterns, and owners can often improve value before going to market.

Repeat: Owners can often improve the value of their practice before going to market.

Revenue multiples are often used when earnings vary widely, or a buyer is primarily acquiring your book of business. Typical market ranges are based on gross revenue, with higher multiples tied to strong client retention and clean, trackable production. Higher average fees, especially business work and monthly services, and limited client business concentration can also be important. Revenue is a starting point—not the whole story. Two firms can have identical revenue and very different margins.

EBITA (Seller Cash Flow Multiples) is the usual focus for strategic firms and platform/private equity buyers. They normalize owner compensation, non-recurring expenses, and one-time items to see what revenues the practice truly generates. As firms scale, multiples tend to rise with size and operating maturity.

It’s very important for a seller to be willing to execute an effective transition plan. The time required for transition should be considered when planning how much time the business owner ultimately wants the exit to take.

What can push the value of an accounting firm higher.

Buyers pay premiums for accounting firms that feel low-risk and easy to integrate. Positive purchasing situations are enhanced with the following:

• Recurring revenues through services like CAS/bookkeeping, payroll, and advisory or consulting that reduces billing seasonality,
• Client diversity: limited concentration of revenue with clients and a predictable record of retention
• Margin quality: A consistent, defensible earnings history is just as important as client retention
• Staff leverage: A firm with quality associates, capable managers and loyal client relationships
• Modern workflow: Use of cloud platforms and automation, are important, along with clean reporting of activities, revenues and costs.

Getting Ready: Build Your Advisory Team

Selling your business is likely the largest and most complex financial transaction of your life. A casual conversation with your financial planner or a rough draft of your will is not exit planning — it's wishful thinking. It’s a lot more than an accounting transaction. Real exit planning means assembling a team of specialized advisors: a financial planner, perhaps an outside tax consultant, a transactional attorney, and critically, an M&A advisor who has actually structured and closed deals in your industry.

Before that team can go to work for you, honestly answer these three questions:

• Are your financials clean, accurate, and defensible?
  Buyers — especially private equity — will scrutinize every line item. Inconsistent records, owner add-backs that can't be supported, or weak balance sheets will erode valuation and kill deals.
• Can the business operate without you?
  A company that runs on the owner's relationships, approvals, and presence is a higher-risk acquisition. Buyers pay premiums for businesses with capable management teams and associates and documented processes.
• Do you know what your business is actually worth?
  Have you undergone a real business valuation process in the past. This isn’t what you think it's worth — it means what a sophisticated buyer in today's market would pay.

Business valuation is both art and science, and for most owners — who have 80–90% of their personal wealth tied to their enterprise — arriving at that number is one of the most consequential financial exercises they'll ever undertake. A professionally developed valuation, grounded in current market data and deal comps, meaningfully improves your odds. Why does this matter?

Nationally, approximately 70% of business sale transactions fail to close.

The stakes are too high to rely on guesswork. A successful transition doesn't just affect you. Your employees, vendors, customers, and community depend on continuity. The alternative — an unprepared, distressed exit — can result in a business being liquidated at a fraction of its true value. Perhaps, a lifetime of work, dissolved.

Whether the path forward is a sale to a strategic buyer, a private equity transaction, a management buyout, or a family transition, each option demands preparation.

It’s important to get a good business valuation, understand why deal structure matters as much as the price of the business, and avoid mistakes that business owners sometimes make regarding this critical decision and process.

Whether you decide to Grow or Go, the time to act is before the decision is made for you. The accounting industry is in a rare window — elevated valuations and active buyers are creating real opportunity. Getting an exit plan in place is one of the most important steps you can take to protect and maximize that which may have taken a lifetime to build – your business.

Know what your accounting practice might be worth:
Get a Confidential Value Range Assessment.

Whether or not you are considering a sale within the next year or two, it’s the perfect time to start with a confidential valuation conversation and get to work on a clear roadmap for an exit strategy, understand the value of your firm in today’s marketplace, and take steps to improve what your practice could be worth. All it takes to get started is brief phone call. Get started right now.

Call Matt Sobieski, CPA
Sunbelt Business Advisors Accounting Practice Specialist
612-964-8884.