If you are a CPA, accountant, or tax preparer, one of the biggest financial decisions you’ll ever make is when and how to sell your practice. At the same time, more buyers than ever are looking to buy an accounting firm as a faster path to growth than building from scratch.
Whether you are thinking about selling your CPA firm in the next year or exploring the purchase of a tax practice, understanding what really drives practice value is the first step.
Why Valuation Matters for Both Buyers and Sellers
For sellers, a clear and realistic valuation:
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Helps you decide whether now is the right time to exit.
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Guides how you position the practice to buyers.
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Reduces surprises when offers and deal structures start to show up.
For buyers, understanding valuation:
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Keeps you from overpaying for a book of business that won’t transfer well.
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Helps you compare multiple opportunities on an apples-to-apples basis.
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Clarifies what needs to stay in place post-closing (staff, seller transition, etc.) to protect the investment.
In other words, valuation isn’t just a number—it’s a roadmap for a smoother, more successful transaction.
Key Drivers of Accounting Practice Value
While every deal is unique, certain factors come up again and again when valuing a CPA firm or small tax practice.
1. Revenue Size and Mix
Most accounting and tax practices are initially priced using a multiple of gross revenue. But not all revenue is created equal.
Buyers look closely at:
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Total annual gross revenue.
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Percentage of revenue from tax prep vs. write-up/CAS vs. advisory.
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Growth or decline over the last 3–5 years.
Firms with a higher share of recurring work (monthly bookkeeping or CAS, payroll, ongoing advisory) typically command stronger multiples than firms heavily weighted toward one-time projects.
2. Recurring and Transferable Client Relationships
One of the first questions a buyer asks is: How likely are these clients to stay after the sale?
Value goes up when:
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The practice has a high client retention history.
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No single client dominates the revenue.
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Clients are used to working with the team and systems, not only the owner.
If most clients are long-term, recurring, and have relationships with staff (not just the partner), the practice is easier to transfer and worth more to most buyers.
3. Profitability and Cash Flow
Two firms with the same revenue can have very different values if their profitability is different.
Serious buyers want to see:
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Consistent, healthy margins after normalizing for owner compensation and personal expenses.
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Clean, well-organized financial statements and tax returns.
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Realistic add-backs (not a long list of vague “personal” costs).
In many cases, buyers will evaluate Seller’s Discretionary Earnings (SDE) or adjusted EBITDA rather than just top-line revenue.
4. Staff, Systems, and Technology
A practice that runs on documented processes and solid technology is far more attractive than one that lives in the owner’s head.
Value increases when:
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There is experienced staff willing to stay on after closing.
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The firm uses modern practice management, workflow, and document systems.
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Procedures are documented so a new owner can step in without chaos.
For buyers, this can be the difference between acquiring a job and acquiring a business.
5. Niche, Location, and Client Profile
Finally, buyers consider where and how the practice operates.
Key points:
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Niche or specialty (for example, dental, medical, real estate, or multi-state tax) often supports higher pricing.
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A strong local or regional reputation can be a major asset, especially in growing markets.
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A balanced mix of business and individual clients, with reasonable average fees, tends to be more attractive than a list of low-fee, once-a-year returns.
Even “virtual” or remote practices are seeing strong demand as more buyers look for scalable, location-flexible firms.
Typical Deal Structures for Buying or Selling a CPA Firm
The headline price is only part of the story. How the deal is structured can make just as much difference for both sides.
Common structures include:
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Down payment plus seller financing over several years.
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Contingent payments or earnouts tied to client retention.
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Short- or medium-term employment or consulting agreements for the seller to help with transition.
A well-structured deal aligns incentives: the buyer feels protected, and the seller is rewarded for a smooth handoff and solid client retention.
When Should You Start Planning an Exit?
Most owners wait too long to think about selling. In an ideal world, you start grooming your practice for sale 2–3 years before you want to exit by:
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Increasing the share of recurring revenue.
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Delegating more work to staff and standardizing processes.
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Cleaning up your financials and books.
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Considering gradual shifts in client mix or minimum fee levels.
Even if you’re not ready to sell yet, understanding value now gives you more control over when and how you eventually exit.
How Naab Consulting Helps Buyers and Sellers
At Naab Consulting, we focus specifically on the purchase and sale of accounting, CPA, and tax practices. That means we work every day with the issues described above—valuation, deal structure, client transition, and financing.
We assist:
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Owners who want to sell their practice and maximize value while protecting their clients and staff.
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CPAs, accountants, and tax preparers who want to grow through acquisition and need help finding, evaluating, and closing on the right opportunity.
If you are considering buying or selling a practice—now or in the next few years—having an experienced, specialized intermediary on your side can make the process smoother and more successful.
Thinking about buying or selling an accounting practice?
Visit naabconsulting.com or contact us to confidentially discuss your goals and explore what your next move could look like.