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Most accounting firm owners care deeply about their clients, some of whom have been with them for decades (Ariel Skelley/Getty Images)

For accountants working in a small or medium-sized firm, retirement often means putting their firm up for sale. But, while many CPAs might be interested in taking over, there are some unique aspects to buying and selling small to medium-sized firms that both parties should keep in mind. Here are a few.


A firm’s selling price is always based on its revenue, explains Sonia Albert, broker at Accounting Practice Sales. “The price will be different depending on whether the income comes from tax preparation, bookkeeping, general services or specialized services,” she specifies.

CPA Joe Truscott knows the process well: he sold his practice to Hamilton after a very long time in business. “The more stable your income, the higher the multiple – around 1.1, 1.2, even 1.3 or more,” he says. “On the other hand, if your practice is simply to prepare tax returns, the value will be less, because buyers are interested in customers with good average billings, especially when the services provided offer added value. »

Albert accepts. “In the United States, some multiples have already been very high (from 1.5 to 1.75 times the income), but the market is less aggressive in Canada and used to working with brokers, who can offer more ‘potential buyers, is more recent.

But each case is unique, she says. “We once sold a business that offered specialized services at a price that was twice its turnover, while some are harder to sell. This will always depend on the nature of the practice, local conditions, location, cash flow, employees, etc. For example, if several people want to leave at the same time, this will have an impact on the sale.

In any case, Albert isn’t worried about the number of baby boomers who might put their practice up for sale in the coming years. “I get a lot of inquiries from young, growing firms who are ready, year after year, to grow by buying a traditional firm and converting it. People want to provide more services, in more places, but not from scratch.


When assessing revenue, it’s important to determine if most of that revenue is recurring and if the fees are justified.

As Albert points out, you also need to assess the company’s level of customer concentration: if a few customers account for a large percentage of revenue, their departure could harm the business. This can happen when there is a change in ownership, but also when a client business is growing rapidly and the business cannot keep up.

Profitability must also be taken into account, the broker says. “A small, well-run practice can be more profitable than a medium-sized practice. If the revenues are the same, you can start by comparing the number of employees. Additionally, some firms outsource tax preparation, for example, which gives them more time to focus on higher value-added services.

That said, there needs to be a healthy balance between outsourced and in-house services, says CPA Ismail Akhter, Director, Tax and Audit, Member Development and Support at CPA Canada. Indeed, in the end, outsourcing comes with its own set of risks: quality control, data privacy, branding, and legal liability. Therefore, whether you are buying or selling the business, it is important to keep these points in mind.

Other criteria to consider: What new clients can the firm attract? Is the property part of the sale? Has a lease been signed recently?


There are also variables that are more difficult to quantify. For example, has the practice shifted from paper to cloud-based services? If not, is the software used compatible with that of the buyer?

“Even though the pandemic has accelerated investments in technology, you still see a lot of traditional accounting practices,” Albert notes. “Some firms go through a full digital transformation before selling, while others sell with a basement full of archives, which can affect resale value.”

While it’s never too late to invest (even a little) to upgrade, Akhter points out that the tools invested a few years ago may already be obsolete. “Some owners have to realize that the value of their practice could drop if they do nothing,” he says.

Akhter adds, however, that a change doesn’t have to be complicated; “Even going paperless can have a big impact on a company’s value,” he says.

Good employees are also invaluable. “The labor shortage has created a situation where CPAs often sell their practice because the workload is too heavy,” says Albert. “And big companies that have a hard time retaining employees are buying up small companies just to get their employees.”


It’s a mistake to think that selling a practice is all about the numbers, says Truscott. “Most people are very committed to their customers. I was with some of my people for 30 or 40 years, sometimes until they died. This is why the seller will want to find a buyer with whom he has an affinity. It may be one or more partners, for example, from another firm who wish to become independent or to merge.

While some owners prefer to obtain the highest price by selling to another company, others favor continuity, even if it means accepting a lower offer from an independent buyer, such as one or more employees of the company. “Sometimes employees would like to buy the company they work for, but they may not have the experience or the means and are considering leaving out of frustration,” says Albert.

Truscott went through a broker for the sale of his practice and was pleased with the quality of potential buyers he was referred to. The buyer he chose is younger and more tech-savvy than him, which he sees as a big advantage. “He will take the business to the next level. The employees are delighted. »


According to Albert, the terms of the sale are essential to a successful transaction. “The buyer needs to understand the workplace, the culture, the employees and how they are treated. Can they work from home? Is the atmosphere relatively relaxed or strict? Some people may be unhappy with the sale of the business, so they need reassurance, especially since employees have been known to leave with accounts receivable.

Indeed, the transaction is not without risk and it is important to organize a smooth transition so as not to worry customers. “If you’ve provided them with good service and supported the buyer, most will stay because leaving would mean a lot of change for them,” says Truscott, who chose to personally share the news of the sale with his most important customers.

Of course, the ideal outcome (at least for the seller) is to get the total agreed amount at closing. But there are many other options, often with contingent considerations. For example, some buyers like to spread their payments over a few years and adjust them based on income.

Whatever the operation (sale, merger, internal succession, etc.), the seller must be present during a transition period, which can range from a few months to a few years.

As Akhter points out, they can do this as a consultant or with certain clients only. But the objective is always the same: to ensure a smooth transition.

In Truscott’s case, he was involved with the business for a while after the sale was completed, which meant retirement was a bit more gradual. “For this reason, I haven’t taken the time to develop more new hobbies than the ones I already have,” he says. “But now that everything is finalized, I plan to retire soon and take on my next challenge: providing specialized tax services.


Learn more about selling an accounting practice with these six expert tips. And don’t forget to check out CPA Canada’s post Buying and selling an accounting firmwhich provides a comprehensive overview of the process.