Accounting Practices/Fee Parcels Business

There is a steady demand for accounting practice/fee parcels.  Typical buyers are:-

• Qualified professionals with a few years of working experience looking to own their own accounting practice.
• Established accounting practice looking to expand.
• Established financial planning oriented practice.

What is a typical accounting practice worth?

Note:  The information provided is general in nature and is presented as a guide only as every practice has its own unique qualities. It does not take into account the specific characteristics of a particular practice or the market conditions that exist at the time of transaction.

Characteristics that determines the value:

• Revenue compositions
• Core service competencies
• Location of practice
• Demographic profile of client base
• Skills of existing employees
• Quality of office setup

Smaller Practices (less then $1 million in revenue)
For smaller practices and fee parcels, the values are typically expressed as a multiple of gross fees of the practices rather than the net profit.  Range is between 70 cents to 110 cents in the dollar.

Larger Practices (more then $1m in revenue)
The Return on Investment (ROI) method is usually used for larger practices (turnover of above $1 million), where the revenues are generated from a more diverse range of services.

If the ROI method is used to value “small” practices, the profit is usually based on a “working owner basis”, where a working owner’s wage is included as part of the profit for the business.