United States. Selling an accounting or CPA practice
Accounting firm valuation: what is your practice worth?
Practice sales are quoted as a multiple of gross recurring fees, the least interesting part of the deal. Proceeds turn on how much fee base survives transition, the price's tax allocation, and how long you carry client losses.
2.3x
median multiple for US businesses selling under $500,000, the band most practices sit in
Residual
the allocation method the IRS requires both parties to use on an asset sale
What happens next
- Tell us about the practice: recurring fees, work mix, people, and how long you could stay on. Two minutes, no account.
- We pass your details to M&A advisers, and to no one else.
- They come back with their own view of the multiple, the structure and the clawback terms. Compare, choose, or walk away.
Accountancy Valuation is an information site. It is not affiliated with, endorsed by or connected to the AICPA, the IBBA or any buyer or adviser named here, and it is neither a law firm nor a tax adviser. Nothing on it is legal, tax or valuation advice, and it does not value any particular practice. We publish no practice-specific multiple because no primary source we could read publishes one; the transaction figures quoted are the surrounding market of US business sales, sourced and dated. We take no commission and carry no paid placements.
What moves an accounting practice's price, and what the buyer will ask for, 2026
Last updated
A practice is bought for a fee base it expects to keep, so almost every adjustment to the headline multiple is really a judgement about retention risk. This table sets out the factors buyers price, which direction each moves the number, and the evidence you will be asked to produce for it.
The factors and the evidence requests describe how practice sales are structured; they are a statement of mechanics rather than measurements, and no multiple is asserted for any of them because no primary source publishes practice-specific multiples we could read. Where a number appears anywhere on this site it is sourced and dated: transaction multiples come from the IBBA and M&A Source Market Pulse survey of US business sales up to $50M, whose Q2 2025 edition drew on 272 transactions reported by 326 advisors and reported a median of 2.3x for businesses under $500,000, the band most accounting practices fall into. Tax treatment comes from IRS guidance on the sale of a business and valuation approaches from the SBA. Nothing here is a valuation of any particular practice.
| Factor | What it does to the multiple | What the buyer will ask for |
|---|---|---|
| Fee base concentration | Down, sharply, where one client is a large share of fees | A client-by-client fee schedule for three years |
| Recurring versus project work | Up for compliance and payroll work that recurs annually | A split of fees by service line and by recurrence |
| Owner dependence | Down where clients deal only with the principal | Who signs, who meets the client, and who they call |
| Client average age and tenure | Up for long tenure, down for an ageing client base | Tenure distribution and attrition for three years |
| Staff continuity | Up where qualified staff will stay | Contracts, notice periods and any non-solicit |
| Software and workpaper quality | Up where files are standardised and portable | A demonstration in your own system, not a description |
| Cash basis versus accrual reporting | Neutral on price, decisive on diligence speed | Both, reconciled, if you report on cash basis |
| Allocation of the purchase price | Neutral on price, large on your NET | An agreed residual-method allocation in the contract |
- US businesses selling under $500,000, the band most accounting practices fall into, had a median multiple of 2.3x in the IBBA Market Pulse survey for Q2 2025.
- In an asset sale the IRS requires both buyer and seller to use the residual method to allocate consideration across capital assets, depreciable property, real property and inventory.
- Depreciable and real property held over a year attract section 1231 treatment while inventory produces ordinary income, so allocation changes your after-tax proceeds without changing the price.
- The SBA names three valuation approaches for any business sale: income, market and assets.
- An advisor may broker a practice sale without registering where prior-year EBITDA was under $25,000,000 or gross revenues under $250,000,000.
Cite this page
“What moves an accounting practice's price, and what the buyer will ask for, 2026”, Accountancy Practice Valuation, https://accountancyvaluation.com/ (updated 2026-08-15). The factors and the evidence requests describe how practice sales are structured; they are a statement of mechanics rather than measurements, and no multiple is asserted for any of them because no primary source publishes practice-specific multiples we could read. Where a number appears anywhere on this site it is sourced and dated: transaction multiples come from the IBBA and M&A Source Market Pulse survey of US business sales up to $50M, whose Q2 2025 edition drew on 272 transactions reported by 326 advisors and reported a median of 2.3x for businesses under $500,000, the band most accounting practices fall into. Tax treatment comes from IRS guidance on the sale of a business and valuation approaches from the SBA. Nothing here is a valuation of any particular practice.
Worth knowing
Every figure sourced and dated.
- The multiple of gross recurring fees, and what it hides
Practices are quoted as a multiple of annual fees. Why that number tells you little on its own, and the three adjustments that decide the real price.
- Retention clauses, clawbacks and earn-outs on a practice sale
Most practice sales pay part of the price later, contingent on clients staying. How the mechanisms differ and which risks you keep.
- Allocation: the clause that changes your net, not the price
In an asset sale the IRS requires a residual-method allocation across asset classes taxed differently. It moves your proceeds without moving the headline.
Common questions
How is an accounting firm valued in the US?
A multiple of gross recurring fees, by convention: shorthand, not valuation. It prices the share of the fee base surviving transition, so concentration, recurrence and owner dependence outweigh revenue. The SBA names three formal approaches: income, market and assets. IBBA Market Pulse reported a median 2.3x for US businesses selling under $500,000 in Q2 2025, most practices' band.
Do accountancy valuations work the same way?
Yes. Accountancy valuation is the British name for the same exercise. For a US practice: a multiple of gross recurring fees as shorthand, adjusted for how much of the fee base survives transition. The SBA names income, market and asset approaches as the formal methods. Retention terms and the price allocation then decide what you actually receive.
What reduces the value of a practice most?
Client concentration, by far. One client holding a large share of fees is a risk the buyer cannot diversify away and priced hard. Owner dependence is next: if clients deal only with the principal, the buyer gets an introduction, not a relationship. Two years fixes both: second contacts on the largest accounts, ad hoc work moved to recurring engagement letters.
Will I be paid in full at completion?
Almost never. Part of the price is normally deferred against retention. A retention adjustment holds money back until the base holds; a clawback pays up front and takes it back if the base falls. Definitions matter more than percentages: fees billed or clients counted, anniversary or average, and carve-outs for clients lost to the buyer's fee increases.
Should I accept an earn-out?
Only if you stay involved. An earn-out pays on future performance, not retention: reasonable when you can influence the outcome, close to a lottery ticket when you cannot. Refuse an earn-out on any metric you cannot affect after completion. An eighteen month growth target is no fair basis for paying someone who leaves in six.
How does the price allocation affect what I actually receive?
Substantially, in a clause most sellers skim. In an asset sale the IRS treats the business as separate assets in four differently taxed classes, and both parties must use the residual method. Capital assets: capital treatment. Depreciable and real property held over a year: section 1231. Inventory: ordinary income. Raise allocation in the first commercial conversation, not at signing.
Is a stock sale better than an asset sale?
For a seller, usually. For an incorporated practice selling stock, the IRS says your interest is represented by stock certificates and the sale generally realises capital gain or loss. Buyers often resist, inheriting the entity's history with its clients. It is a commercial negotiation with a tax consequence. Settle it before any engagement letter fixes a fee.
Does the broker selling my practice need to be registered?
Often not. 15 U.S.C. 78o(b)(13), the M&A broker exemption, permits unregistered brokering of an eligible privately held company's sale. Prior-year EBITDA must be under $25,000,000 or gross revenues under $250,000,000, the acquirer expected to control and actively manage it. It falls away if the broker receives, holds or has custody of transaction funds or securities, possibly escrow. Ask in writing.
Sources
This site's own dataset, every figure quoted from its source and dated:
- The Practice Marketplace Coverage carries 158 published figures read from 11 sources' own pages; the 91 published figures given by state or region run from 62,000 to 4,000,000 USD, read 11 November 2026.