Quick answer: Buyers value an accounting or tax practice on adjusted EBITDA and on how reliably its fees repeat. Recurring compliance, bookkeeping and advisory fees with long-tenured clients are worth more than one-off projects. Buyers look at fee concentration, the age and loyalty of clients, the service mix, staff depth and the plan for partner succession. Deals commonly tie part of the price to the fees retained after the transition, and professional rules shape who may own a firm and how client information is shared.
Key points
- Fee quality is the heart of value. Recurring tax, bookkeeping and advisory work is valued above project work, and long relationships above new ones.
- Clients follow people. Buyers examine which partner holds each relationship and how the firm plans to keep clients when a partner retires.
- Seasonality affects working capital and timing. Work in process and receivables peak around filing deadlines, and the closing date matters.
- Professional rules matter. Ownership, independence and confidentiality requirements vary by state and by service, and they shape the structure and the diligence process.
What buyers are paying for
An accounting or tax practice has a base of clients who return each year, a staff that does the work and a few senior people who hold the relationships. Buyers pay for the stability of that base. The best practices have long-tenured clients, fees that grow with the clients’ needs, a team that can serve clients without the partners doing all the work, and a plan for the partners’ eventual retirement.
The risk is that clients are loyal to people. A practice whose clients mostly know one partner is a different asset from one where several people have built relationships, and buyers test which they are looking at.
Public-market reference data
The January 2026 data for the business and consumer services group, covering 155 US-listed firms, shows an enterprise value to EBITDA multiple of 14.3x and an EBITDA margin of 15.7%.[1][2]
Public-company reference data, United States, as of January 2026[1][2]
| Damodaran industry group | US-listed firms | EV / EBITDA | EV / EBIT | EBITDA margin | Gross margin |
|---|---|---|---|---|---|
| Business & Consumer Services | 155 | 14.3x | 20.1x | 15.7% | 33.4% |
The multiples cover companies in each group that have positive EBITDA; the margins come from the same author's separate margin dataset for the same industry groups. Most private companies are smaller, less liquid and less diversified than these public companies, so private-company transaction multiples differ, and often sit below them. No public industry group matches accounting and tax practices, and Business and Consumer Services is a loose proxy.
Public companies in this group are large service businesses. They do not include accounting practices of the kind that change hands in the private market, and professional firms have their own ownership rules and client dynamics. Use the table as context for how the public market prices service earnings. The guide to valuation multiples explains how buyers adjust.
What buyers examine
Fee base and quality. Fees by service line: tax compliance, bookkeeping, audit and review, payroll, and advisory. Buyers distinguish recurring engagements from one-time projects and look at the trend in fees per client.
Client retention and tenure. The share of clients and fees retained each year, the age of the client base and the number of clients that have left. They look at the concentration of fees among the largest clients, as the customer concentration guide explains.
Ownership of relationships. Which partner or manager is the primary contact for each major client. Buyers ask about past departures of staff and any clients that followed.
Staff and capacity. The experience of senior staff, turnover, hiring costs and the use of remote or offshore resources. A practice that can add clients without adding partner time has room to grow.
Seasonality. Tax season concentrates work and billing, so receivables and work in process vary through the year. The working capital peg guide explains why timing the closing date matters.
Pricing and realization. Billing rates, fixed-fee engagements, write-offs and how fees have changed. A practice that has not raised its prices may have room to do so, but buyers also test whether clients will accept.
Technology and process. Software, workflow and security for client data affect efficiency and risk.
Risk management. Professional liability insurance, claims history, engagement letters and quality review records.
Professional rules and diligence
Accounting is a regulated profession, and some rules affect transactions. Ownership and investment in firms are shaped by state rules and by the type of services performed. Independence requirements for audit and attest clients can limit what a buyer may be involved in. Client confidentiality limits what can be shown to a buyer before a sale, and clients may need to be informed or give consent when their files move. These matters differ by state and by service, and counsel should be involved from the start.
Adjustments
In addition to owner items in the add-back guide, buyers examine partner compensation, which is often paid as distributions and must be replaced with a market cost of the role. Work in process and unbilled time are reviewed for realization. One-time fees and fees from clients that have given notice are excluded from the run rate.
Illustrative example: A deferred payment tied to retained fees
A buyer agrees to a price of $6,000,000 for a practice with annual fees of $4,000,000. It pays $4,200,000 at closing and defers $1,800,000, with the deferred amount scaled to the share of baseline fees retained after twelve months, up to the full amount. After the year, the practice retains fees of $3,640,000, or 91 percent of baseline. The deferred payment is $1,800,000 times 0.91, or $1,638,000, and the total price is $5,838,000. If the retiring partners had helped introduce the buyer’s team to clients, retention would likely have been higher. The numbers are invented to show the mechanism and are not benchmarks.
Structure of the deal
Retention-based earnouts are common, as the earnout guide explains, and so are transition periods in which selling partners stay engaged. The key-person risk guide describes why. Non-compete and non-solicitation covenants are standard, and their enforceability varies by state.
Who buys
Strategic buyers include larger regional and national accounting firms, which grow by acquiring practices, and firms looking to enter a market or add a specialty. Private equity-backed platforms are another category of buyer in some structures, subject to the professional rules described above. Partners within the firm, and employee ownership arrangements, are other routes. Each affects price, control and the role of the sellers differently.
Preparing for a sale
- Prepare fees by client and service line for at least three years, with tenure.
- Identify the relationship owner for each major client.
- Document staff, roles, turnover and succession plans.
- Show work in process, realization and the seasonal pattern of receivables.
- Obtain legal advice on ownership, independence and confidentiality rules before approaching buyers.
- Plan how clients will be informed and introduced to the new team.
The professional services series covers related industries.
Frequently asked questions
Is a firm sold on a multiple of revenue or of earnings?
Both appear in practice. Smaller practices are often discussed as a multiple of annual fees because it is simple. Buyers still need to know the profit the practice produces and the cost to serve the clients. Larger firms are priced on adjusted EBITDA like other businesses.
Can client files be shared with a prospective buyer?
Only within professional confidentiality rules. Firms usually share summary information without client identities at first, and share identifying details later and under controls that comply with those rules. Client consent may be needed. Counsel or the relevant professional body can guide the process.
How do buyers handle partner retirement risk?
They ask who is approaching retirement, which clients each partner manages and what the transition plan is. Many structures keep retiring partners involved for a period and tie part of the price to client retention. A firm with a younger layer of partners is viewed more favorably.
Who can invest in or own an accounting firm?
It depends on state law and the type of services. Rules differ for firms that provide audit and attest work and those that do tax, bookkeeping and advisory work only. Some structures separate the two. Because the rules are specific and change, legal review of the structure is an early step.
Need a valuation you can use in a sale or acquisition decision?
The Impetus Group prepares transactional valuations from the standpoint of strategic and financial buyers. A valuation is a standalone engagement with its own scope and fee, and it can be the first step before a sale or acquisition process.
Related guides
- Customer Concentration and Valuation: How Buyers Price the Risk: Why buyers pay less for businesses that depend on a few customers, how they measure concentration, and what owners can do to reduce the discount before a sale.
- Key-Person Risk: How Owner Dependence Affects Valuation: How buyers measure owner dependence, why it lowers value and shapes deal structure, and what an owner can change in the years before a sale to reduce it.
- Earnouts Explained: How Contingent Consideration Works in a Sale: An earnout ties part of the purchase price to future results. Learn how earnouts are structured, why buyers propose them and how sellers can value the risk.
- Net Working Capital Peg: How the Working Capital Adjustment Works: The working capital peg sets the level of working capital a seller must leave in the business at closing. See how it is calculated, negotiated and adjusted.
More in professional and white-collar services
- Market research and information services: How buyers value market research and information firms: subscription renewals, data rights, deferred revenue, proprietary datasets and custom research.
- Training and professional education companies: How buyers value corporate training and professional education companies: content ownership, enterprise contracts, instructors and accreditation.
Sources
- Enterprise Value Multiples by Sector (US), data as of January 2026. Aswath Damodaran, NYU Stern School of Business. Accessed October 8, 2026.
- Operating and Net Margins by Sector (US), data as of January 2026. Aswath Damodaran, NYU Stern School of Business. Accessed October 8, 2026.
This guide is general education. It is not a valuation opinion, appraisal, investment advice, or legal or tax advice. How these guides are made.