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More Tips on How To Sell Your Accounting Practice
Submitted April 17, 2009 by Brian Naab | 0 comments

If you are thinking of selling your accounting practice this year you might want to consider a few of the following ideas and thoughts:

 

Determine Realistic Price & Terms - Applying an asking price on your accounting firm can be one of the most difficult tasks when trying to sell your practice. If the asking price is too high you will receive little or no interest. Pricing too low leaves money on the table. Most accounting and tax practices initial asking price is based on market conditions and comparable sales, similar to the real estate industry, but then are adjusted for a variety of factors.

Each accounting practice is going to be unique in the services provided, some will provide all tax, others half tax and half accounting, others with accounting, tax and sprinkle in a few audits and reviews, and so on and so forth. This uniqueness is one of the reasons accurately pricing a practice for sale is so difficult. Ultimately the practice is going to sell for market value which will be perceived by the buyer.

 

Some of the factors that will help to increase the overall purchase price will be location. Practices located in more desirable locations will sell for a higher multiple. When I say desired locations, I am referring to metro areas (i.e. New York, Chicago, Cleveland, St. Louis, etc.). Even these metro areas can yield different prices. Prices in the New York area are typically higher than those in the smaller metro areas like Cincinnati, Nashville, etc. Practices located in rural areas tend to get around 1 to maybe slightly higher than 1 x's billings. Metro areas can go for anywhere from 1 to 1.5 x's generally.

 

Breakdown of revenues is also a driving factor in establishing a reasonable asking price and terms. Each buyer is going to be a little different. Some buyers may be looking for mainly a bookkeeping or write-up practice to help supplement their year round cash flow from tax season. Some buyers like to do returns and only returns and be looking for a mainly tax practice. Generally both tax practices and full service practices will sell for around a similar multiple because buyers will decide the final selling price and there are buyers for both.
 



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