How to Value and Sell an Accounting Practice

To sell any business successfully – and get the best result in the shortest time – it’s crucial to have the business professionally valued. Every business is different, of course, and finding the right formula is paramount, especially when it comes to selling an accounting practice.

Mark Attard of Xcllusive Business Sales explained that there are several methods used to value a practice for sale.

“For larger practices with fees above $1 million, multiple of profit after owner’s wages seems to work best,” he said.

City vs Country

“If the fees are under $1 million, they tend to be valued on the break-up of business vs personal returns. In Sydney, where demand is highest, the rate seems to be 50 cents to the dollar for personal returns and $1-1.20 to the dollar for business returns.”

Mark explained that, given the reduced demand, you can take around 25% off that for regional and country practices.

“Ideally, price is maximised when the owner is willing to stay or leave a meaningful retention of around 20%, or stay with the business for 12-18 months, or a combination of both,” Mark said.

Maintain continuity

“A general willingness to help the incoming buyer is therefore paramount as is excellent customer care. If the outgoing owner commits to 12-18 months, no ‘heavy lifting’ would be required. Just being around, visual and showing some continuity and presence in the business will help.”

Mark says it’s very important to do a proper handover of relationship, maybe even requiring more than one meeting for larger clients. An ongoing commitment by staff to stay on for a term is also a bonus.

“Commitment to stay at the same location – or at least in the same area – for a period to show that it’s business as usual is also important. Ideally, we suggest that the name of the business be retained in the medium term with a soft introduction of the acquiring firm’s advertising and signage.

Mark A

“Fees need to be kept consistent during the transition to ensure customer defection is minimised,” said Mark.

If you’d like to know, phone Mark on 0430 599 001.

About Mark

Formerly a banking manager for ANZ for 20 years, with a Post Graduate Diploma in Financial Services Management, Mark’s understanding of business principals is second-to-none. It’s his ability to listen attentively and work closely with clients that eventually lead to him joining the Xcllusive team.

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