Insider’s Guide to Selling your Accounting Practice
In this month’s newsletter, our guest author, Denise Hall of Xcllusive Business Sales, shares The Insider’s Guide to Selling Your Accounting Practice, a must-read for any accounting practitioner considering their next chapter.
Whether you are planning a future exit or actively exploring your options, this guide walks you through everything from valuations and buyer expectations to transition strategies and market trends. You will gain insight into:
- What really matters to buyers
- How to protect your client relationships
- Why now might be the right time to start planning.
Selling your practice does not have to be overwhelming—it can be a smart, strategic step forward. Read here to learn how to do it right.
Navigating the Sale of Your Accounting Practice: An Insider's Perspective
As a seasoned business broker specialising in professional service businesses, I've witnessed countless accounting practice sales. The journey of selling your life's work is nuanced, emotional, and strategic. This guide will provide you with insights into successfully transitioning your accounting practice to the right buyer.
The Unique Landscape of Accounting Practice Sales
Unlike most businesses, accounting practices have a distinct sales ecosystem. Remarkably, approximately 80-90% of practice sales are driven by retirement, compared to just 20% in other industries. Accountants are methodical professionals who carefully contemplate their exit strategy, often spending years planning before taking action.
Why Accountants Delay Selling
Many practitioners remain deeply connected to their practices well into their seventies and eighties. This attachment stems from:
- Strong client relationships cultivated over decades
- The engaging nature of professional service work
- Difficulty letting go of established networks
- A sense of professional identity tied to their practice
- What will they do to replace this
Valuation: More Than Just Numbers
Accounting practice valuations differ significantly from other business sales. While most industries focus on profits, accounting practices are primarily valued based on revenue. Here's a breakdown of typical valuation methods:
Revenue-Based Pricing (per $1 of revenue)
- Individual tax returns (iReturns): Historically 50-60 cents, now ranging 70-80 cents
- Business returns: $1, to now reaching $1.20
- Practices under $1 million often use per-return pricing
- Larger practices (over $1 million) are valued at approximately 3 times EBIT (Earnings Before Interest and Taxes)
Key Valuation Factors
- Client mix (business vs. individual returns)
- Profitability (typically 30-35%, occasionally reaching as high as 60%)
- Existing client relationships
- Potential for retention
- Willingness of an ongoing relationship with exiting owner
The Buyer's Perspective
Who typically purchases accounting practices? The market includes:
- Ambitious employees in their 30s-40s seeking ownership
- Existing accounting firms looking to expand
- Investment groups building practice portfolios
- Occasional interest from financial planning firms (though less common now)
What Buyers Want
- Stable, recurring compliance work
- Minimal client transition risk
- Potential for growth
- Clear, transferable client relationships
The Critical Role of Client Retention
Contrary to common fears, client retention during practice sales is surprisingly stable. Clients are more likely to:
- Give the new owner a chance
- Stay if service quality remains consistent
- Appreciate a smooth, introduced transition - so they don't have to think about it themselves
Most sales see a natural client churn and acquisition balance, with retention periods typically lasting 12 months.
Transition and Handover Strategies
Successful sales often involve:
- The original owner staying involved for 6-12 months, even longer
- Maintaining client relationships
- Facilitating a seamless knowledge transfer
- Potential ongoing part-time involvement (2-3 days per week)
Retention Mechanism
A common practice is to withhold 10-20% of the sale price, contingent on client retention. This protects the buyer and incentivizes a smooth transition.
Current Market Dynamics
As of 2025, the accounting practice sales market is robust:
- High demand with 50-60 serious inquiries per listing
- Competitive pricing
- Strong bank lending (up to 60-100% of practice fees)
- Increasing valuations driven by supply and demand
Geographic Considerations
- Metro areas see highest demand
- Capital cities attract more buyers
- Regional practices remain saleable with the right approach
Technology and Market Evolution
Despite fears of technological disruption, compliance work remains crucial. If nothing else, the COVID-19 pandemic highlighted accountants' irreplaceable value in:
- Navigating complex regulatory environments
- Providing critical business advisory services
- Managing government assistance programs
Strategic Advice for Sellers
- Prepare early
- Understand your practice's unique value
- Be flexible with transition
- Focus on client relationships
- Consider internal succession options
- Act sooner rather than later
Acquisition Cost Perspective
Remember, buying a practice saves years of marketing and client acquisition. A 10-year-old practice represents a decade of built-in growth potential.
Final Thoughts
Selling your accounting practice is more than a financial transaction—it's a strategic life decision. The right approach can ensure your legacy continues, your clients are well-served, and you transition smoothly into your next chapter.
For personalized guidance, consult with Xcllusive Business Brokers who understand the nuanced world of professional service practice sales. To have an initial conversation, you're welcome to phone-a-friend, Denise Hall 0406000714.
Disclaimer: Valuations and market conditions are dynamic. Always seek professional advice tailored to your specific circumstances.
