Guide
The multiple of gross recurring fees, and what it hides
Updated
Every conversation about selling a practice starts with a multiple of gross recurring fees, and it is a convention rather than a valuation. Two practices with identical fee bases can be worth materially different amounts, and none of the difference shows up in the multiple.
Start the valuation Tell us the fee base, the work mix and how you want to exit. Buyers who acquire practices of that shape will contact you directly.
What the multiple is actually pricing
A buyer is not paying for last year's fees. They are paying for the fees they expect to still be billing in three years, discounted for the risk that they will not be. Everything that moves the multiple is a judgement about that survival rate.
Which is why the questions that feel intrusive during diligence are the ones that matter most: who the client actually deals with, how long they have been with you, and how much of the base sits with a handful of names.
Where the practice sits in the wider market
Most accounting practices sell in the band the IBBA and M&A Source Market Pulse survey calls Main Street, businesses selling under $2M. Its Q2 2025 edition reported a median multiple of 2.3x for transactions under $500,000, drawn from 272 completed deals reported by 326 advisors.
That is not a practice-specific figure and we do not present it as one; no source publishes practice multiples on a page we could read. It is the surrounding market, and it is useful because a practice quoted far outside it should come with a reason.
The three adjustments that do the work
Concentration is the largest. A practice where one client is twenty percent of fees carries a risk the buyer cannot diversify away, and it is priced hard.
Recurrence is the second. Annual compliance, payroll and bookkeeping recur by default; advisory and project work has to be won again. A base weighted to the first is worth more per dollar than one weighted to the second.
Owner dependence is the third and the one sellers underestimate. If clients deal only with the principal, the buyer is purchasing an introduction, not a relationship.
Improve the base before you test the market
Two years of deliberate work moves the multiple more than any negotiation will. Introduce a second point of contact on the largest accounts. Convert ad hoc work onto engagement letters that recur. Standardise workpapers so a buyer can see the files are portable.
None of that is glamorous and all of it is checkable in diligence, which is precisely why it is paid for.