← Back to Insights

Selling an accounting firm is different from selling most businesses. Accounting practices are often valued in relation to gross revenue, and much of that value depends on the quality of your client base, recurring revenue, retention, profitability, and the ability to successfully transition those relationships to a new owner.

What Should You Do Before Selling?

You don't need a business that operates completely without you to have a valuable, sellable firm. Many accounting firm owners remain actively involved in client relationships and day-to-day operations right up until the sale.

What matters is making it easy for a buyer to understand what they're acquiring. Have your financials and tax returns organized, understand your revenue by service line, know how much of your revenue is recurring, and identify any significant client concentrations.

If you have employees, an experienced team that is likely to remain after the sale can provide additional continuity. If much of the business revolves around you, that doesn't prevent a sale, it simply makes the transition period even more important.

How Much is Your Accounting Firm Worth?

While many businesses are primarily valued using a multiple of SDE or EBITDA, accounting firms are often discussed in terms of a multiple of gross revenue.

That doesn't mean every dollar of revenue is valued equally. Buyers will also consider your profitability, recurring revenue, client retention, service mix, client concentration, staff, growth, and how involved you are in servicing clients.

Two firms generating the same revenue can receive very different offers depending on the quality and transferability of that revenue.

Will You Need to Stay After the Sale?

For most small accounting firms, the owner doesn't simply hand over the keys at closing.

Sellers should generally expect to remain involved for at least a year, although the exact transition depends on the buyer and deal structure. You may work through another tax season, gradually reduce your hours, or continue servicing certain clients while introducing them to the new owner.

This transition is important because clients may have worked directly with you for years. Buyers aren't just acquiring revenue, they're acquiring relationships.

What Should You Do Before Selling?

You don't need a large staff or a firm that operates without you. You should, however, make it easy for a buyer to understand what they're acquiring.

If you have employees, a strong team that wants to remain after the sale can add stability. If you're a solo practitioner, the sale and transition can simply be structured around your involvement.

Don't Look at Purchase Price Alone

A $1 million offer isn't necessarily the same as another $1 million offer.

Consider how much you'll receive at closing, how long you're expected to stay, whether there is seller financing, and whether any portion of the purchase price depends on future revenue or client retention.

The structure of the offer can be just as important as the headline number.

← Back to Insights

We've sat across the table from business owners who came to us because they were simply ready to be done.

Sometimes they were exhausted. Sometimes they had lost the excitement they once had for the business.

And by the time selling became a serious consideration, that had already started showing up in the numbers. Revenue had slipped, profitability wasn't what it used to be, and the last few years no longer reflected what the business had once been capable of.

The difficult part was that they still remembered the business at its best.

They remembered the years it was growing, the customers they had built relationships with, the employees they had supported, and everything they had put into creating it. Naturally, that's the business they had in mind when they thought about what it should be worth.

But a buyer has to look at the business as it stands today.

We've had to show owners what the market would realistically pay based on the current numbers. In some cases, the owner decided not to sell. They wanted a higher value, but they were already too exhausted to spend another year rebuilding the numbers to get there.

And unfortunately, we've watched businesses that could have been sold eventually close their doors instead.

That has stuck with us.

Because a business doesn't have to be having its best year to find a buyer. Even if the numbers have started moving in the wrong direction, there may still be an opportunity to sell it to someone who sees what you've built and wants to take it forward. You may not receive what you could have at the company's peak, but you can potentially give the business, its employees, and its customer relationships an opportunity to continue under a new owner.

The bigger lesson is not to wait until you're completely ready to walk away before you start thinking about an exit.

Start the conversation while you still have choices.

You may decide to sell now. You may realize that another year or two of specific improvements could significantly strengthen your position. Or you may decide you're nowhere near ready.

That's exactly why we encourage owners to start thinking about their exit early. The goal isn't to rush you into selling. It's to make sure that when you are ready, you're not making one of the biggest decisions of your life simply because you no longer have the energy to wait.

← Back to Insights

You don't need to be a finance expert to understand your business. But if you plan to grow, borrow, or eventually sell, there are four numbers worth knowing.

1. EBITDA: What Is the Business Earning?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It helps show the profitability of your core operations before certain financing, tax, and non-cash expenses.

For many businesses, EBITDA is also an important starting point for valuation. If your business sells for a multiple of EBITDA, improving sustainable EBITDA can have a multiplied effect on value.

2. CAPEX: What Does It Take to Keep Earning?

CAPEX is money spent on long-term assets like equipment, vehicles, machinery, or property.

Consider two businesses earning the same EBITDA. If one requires significant equipment purchases every year and the other doesn't, their economics aren't necessarily equal.

Buyers care about what the business earns, and what it takes to keep earning it.

3. Cash Flow: Where Is the Money Going?

Profit and cash aren't the same thing.

Your business can be profitable while still experiencing cash shortages because customers haven't paid yet, inventory needs to be purchased, or expenses are due.

Understanding cash flow tells you whether the business has enough money available to operate, reinvest, and handle the unexpected.

4. Working Capital: What Keeps the Business Moving?

Working capital is generally:

Current Assets − Current Liabilities

It represents the short-term resources available to keep the business operating. During a sale, buyers and lenders may also look at how much working capital the company needs to operate normally.

Why These Numbers Matter

Together, these numbers tell a much bigger story than revenue alone. They help show how profitable your business is, how much cash it generates, what it takes to operate, and ultimately how a buyer may view its value.

You don't need to be a financial expert. You just need to understand what your numbers are telling you.