Accounting firms are among the most attractive acquisition targets due to their predictable recurring revenue and high client retention rates. Whether you run a solo CPA practice or a multi-partner firm, understanding how accounting practices are valued helps you plan for succession or sale.
How Accounting Firms Are Valued
Accounting firms are typically valued as a multiple of annual gross revenue or a percentage of fees, though SDE multiples are also used for smaller practices.
Typical Accounting Firm Valuation Multiples
Accounting firms typically sell for 0.8x to 1.5x gross revenue or 2.5x to 4.0x SDE, depending on:
- Client retention rates and relationship stickiness
- Revenue mix (tax vs. audit vs. advisory)
- Client concentration and demographics
- Staff depth and transition willingness
- Technology adoption and systems
What Drives Accounting Firm Value
Buyers pay premium multiples for accounting practices with:
- High retention rates - Client retention above 90% signals sticky relationships
- Recurring revenue - Monthly bookkeeping and payroll services increase value
- Diversified client base - No single client represents more than 5-10% of revenue
- Younger client demographics - Clients with long remaining lifespans
- Cloud-based systems - Modern technology stack attracts buyers
Common Value Detractors
These factors can reduce your practice's valuation:
- Heavy reliance on owner relationships with key clients
- Aging client base approaching retirement
- High concentration of one-time tax preparation work
- Outdated systems requiring technology investment
- Staff unlikely to stay through transition
What's your accounting firm worth?
Get a free estimate using our valuation calculator. Takes about 60 seconds.
Calculate My ValuationPreparing Your Practice for Sale
If you're considering selling your accounting practice:
- Start transitioning client relationships to staff 2-3 years before sale
- Build recurring revenue through monthly services
- Document all processes and client information
- Upgrade technology to current standards
- Consider retention agreements with key staff
The accounting industry continues to consolidate, with strong buyer demand from larger firms seeking to expand and younger CPAs looking to acquire established practices. Well-prepared firms with transferable client relationships command the highest valuations.