Grow or Go: Improving the Value of Your Accounting Firm

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

As an accounting practice owner, you should know that the pace of sales and acquisitions is picking up. Regardless of whether you are considering selling your practice today, you should know what your business might be worth.

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.

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: 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.

Selling your business is likely the largest and most complex financial transaction of your life. Having a team of advisors which includes a business broker or M&A advisor who has actually structured and closed deals in your industry is critical.

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 now while market trends are so positive. 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.

All it takes to get started is a brief phone call. Get started right now.

Call Matt Sobieski, CPA

Sunbelt Business Advisors Accounting Practice Specialist

612-964-8884.