Accounting & Tax Practice Business Valuation Benchmarks

Business owners and prospective buyers rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business-for-sale market and important benchmarks for pricing and evaluating accounting, CPA, and tax businesses relative to industry standards.

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Highlights of Accounting Businesses & Tax Practices Sold on BizBuySell

Accounting and tax practices listed and sold on BizBuySell are primarily small businesses owned and operated by a CPA, though many firms employ multiple CPA's. These businesses engage in a variety of financial services included bookkeeping, payroll processing, accounting services, business consulting, tax consultancy, and tax preparation.

The majority of businesses listed are independent small businesses, though occasionally franchise units are listed and sold. Both are included in this report.

Accounting & Tax Business Transaction Trends

The median sale price of accounting businesses and tax practices had been on an upward trend through 2023, but lost momentum in 2024, with a year over year decline of 20%. While revenue based valuations remained normal, many smaller (albeit more profitable) accounting businesses sold in 2024, bringing the median sale price down.

Accounting & Tax Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of revenue and earnings. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth.

Average revenue and earnings multiples of accounting businesses and tax practices have been consistently improving until 2024, when a disproportionate number of smaller CPA firms were reported sold, bringing down the average earnings multiple.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - business valuations tend to hinge on the earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its overall sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of accounting, CPA, and tax practice businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are generally higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high volume, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Lower volume businesses with thin profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half accounting and tax businesses are valued between 1.58 and 2.62 times their annual seller discretionary earnings, with 25% of well-run, larger companies selling above this range, and 25% of smaller, less desirable practices trading below.

Financial Benchmarks

To determine how a business compares in terms of revenue and earnings relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated financial ranges useful for comparing an individual accounting or tax practice to its peers in the market.

Accounting & Tax Business Revenue and Earnings Trends

Reported revenue and earnings of accounting and tax practices listed and sold on BizBuySell had been growing consistently through the pandemic and following economic pressures, then in 2024 many smaller (though very profitable) practices sold, bringing down market-wide medians.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to other businesses traded on the market. Below you will find discretionary earnings ranges for accounting and tax practices sold over the past five years, as well as recent for sale listings.

Revenue Ranges

Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of accounting and tax businesses sold over the past five years, as well as recent for sale listings.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Successful accounting and tax businesses that consistently generate higher revenue (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, an accounting firm consistently generating sales over $700k annually may sell for an earnings multiple over 2.6, while a smaller practice with sales below $200k may sell for an earnings multiple closer to 1.6 or less.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable income.

Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader financial services sector when benchmarking accounting and tax businesses. The chart and table below includes key metrics from sales of select financial services businesses on BizBuySell between 2019 and 2023.

Accounting and tax businesses fall on the average trend line of earnings multiple to revenue. Relative to the broader financial services category, these businesses receive no premium or discount.

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