Two accounting firms in the same suburb. Both billing around $900,000 a year. Both owner-managed, both compliance-weighted, both with a team of six.

One sells in eleven weeks with three competing offers. The other takes nine months and settles for a figure the owner describes as disappointing.

Nothing on either profit and loss statement explains the gap.

If you’re a practice principal thinking about the next few years — whether that’s growth, succession, a partial exit or a full sale — the useful question isn’t “what’s the going rate?” It’s “what separates the top of the range from the bottom?” Because the difference between those two firms isn’t market conditions or luck. It’s structural, and most of it is fixable.

The benchmark you’re probably using is out of date

Most owners have a number in their head, and it usually came from the old rule of thumb: dollar for dollar. A dollar of sale price for a dollar of annual fees.

That benchmark has been wrong for a while now.

The market has moved up. Metro practices have been averaging around 113 cents in the dollar of recurring fees, with regional practices around 109 to 110, and individual sales reaching as high as 130 (Accounting Times). Practices with strong systems, low principal dependency and a good SMSF or advisory component regularly clear 1.2 to 1.4 times gross recurring fees (Miro Capital).

But the spread has widened at the same time. An owner-dependent, compliance-only book with an ageing client base can sit at 0.5 to 0.8 times fees. Above roughly $2 million in fees, buyers stop thinking in cents in the dollar altogether and start pricing on earnings typically 3.5 to 5 times EBIT for a well-run firm.

So “what’s the going rate” is the wrong question. There isn’t one. There’s a range, it’s wide, and where you land in it is determined by nine things.

Factors 1 to 3: the fee book

Recurring fee percentage. A buyer is purchasing future maintainable fees, not just last year’s billings. Annual compliance, BAS cycles, SMSF administration and monthly bookkeeping recur. One-off restructures, business sales and R&D claims don’t, no matter how reliably they seem to turn up. If you can’t produce that split clearly, a buyer will assume the worst version of it.

Fee mix. This one surprises owners, because advisory work feels more valuable, higher margin, more interesting, closer to the work you actually enjoy. But a buyer prices transferability and repeatability, and on that measure compliance wins. SMSF administration attracts the highest multiples in the Australian market, typically around 1.0 to 1.2 times, with general accounting, tax and audit around 0.8 to 1.1 (ANZ). Predominantly advisory or project-based fees can be much lower (Miro Capital). SMSF clients almost never move, and that inertia is worth paying for.

Client concentration. If your top ten clients are 40% of your fees, the buyer’s downside isn’t theoretical. Under a retention-based structure, one departure can erase their margin. Concentration you can explain and demonstrate stability around is manageable. Concentration a buyer discovers during due diligence is expensive.

Factors 4 and 5: the dependency problem

Principal dependency is the heaviest single factor in any practice valuation, and the one owners consistently over-score on themselves.

The rule of thumb is straightforward: if you can demonstrate that the revenue continues without you through staff, systems and documented client relationships, you get the top end of the range. If the practice is fundamentally you, a buyer is acquiring a job with a substantial handover risk attached, and the price reflects it.

Ask the honest version. If you were unavailable for three months, how many clients would notice, and how many would start looking?

This is the slowest factor to fix and the most valuable. Allow eighteen months to three years. The work isn’t dramatic: introduce a second name into every significant client relationship, have a manager attend and then lead the annual meeting, change who signs the correspondence. The goal isn’t that you stop doing the work. It’s that the client’s sense of who looks after them broadens beyond one person.

Staff continuity sits right alongside it. Your team is part of the goodwill. They hold the client knowledge, the systems knowledge and the daily rhythm of the firm. Clients notice staff morale before they notice anything else. In a profession with a genuine talent shortage, an intact, qualified, stable team is a real asset, and buyers pay for it. Locking in key people with equity or retention arrangements well before a sale process begins is one of the highest-return things an exiting principal can do (CPA Australia).

Factors 6 and 7: what a buyer inherits

Systems and documentation determine how fast someone else can take over without breaking anything. Cloud-based practice management, standardised templates, documented workflows and complete digital files shorten the transition and reduce the buyer’s risk. Desktop legacy software, paper records and critical knowledge held in one person’s head lengthen it and increase theirs.

This is the fastest-improving factor on the list. Twelve months of disciplined tidying makes a visible difference and it also happens to overlap with your obligations under APES 325, which requires firms in public practice to document a succession plan as part of risk management.

Client tenure and age profile cuts both ways. Long tenure proves retention, which buyers value. But a client base that has aged alongside you is a declining asset, and it gets assessed as one. A modest but visible flow of new clients over the last two years reframes a practice from “winding down” to “stable” and that reframing is worth real cents in the dollar.

Factors 8 and 9: the hygiene

Financial hygiene — recovery rates, WIP and debtors tells a buyer how well the practice is actually run. Poor discipline doesn’t just reduce the price; it invites a level of due diligence scrutiny that slows the process and erodes trust at exactly the wrong moment. Start normalising your financials three years out. Separate genuinely personal expenses from practice expenses so add-backs are defensible rather than arguable.

Premises and transferability is the smallest factor and the most likely to cause a late complication. Check your lease assignment clause now, not during due diligence. If you own the building, decide early whether it’s part of the deal and price the rent at market.

The number you’re paid isn’t the number you agree

There’s a tenth factor that isn’t about your practice at all. It’s about structure.

A typical accounting practice sale looks something like this: 60 to 80% paid on completion, the balance over twelve to twenty-four months adjusted for client attrition, clawback provisions if retention falls below an agreed threshold of around 80 to 85%, and the seller remaining involved through the transition (Miro Capital). The most common retention holdback sits around 20%, ranging from zero to 25% depending on the risk profile of the fees and your role in the handover (Accounting Times).

Which means a higher headline price with 40% at risk over twenty-four months can easily be worth less than a lower price with 20% at risk over twelve. Three questions decide it: what proportion is deferred and for how long, how retention is measured, and whether your transition role is documented and paid.

What to do with this

If you’re within five years of a transition, the practical implications are short.

Score yourself honestly on all nine. Start with the two you rate lowest, not the two that are easiest to fix. Give yourself adequate time — preparing and marketing a practice can take four to six months, and most principals then transition over another nine to twelve, which puts the genuine planning window at eighteen months to three years.

And don’t sell privately without testing the market. A quiet deal with a colleague or the firm down the road feels simpler, and it is where value most reliably disappears. Some practitioners underprice their asset by close to half because there was never any competitive tension and never an independent view of what the fee base was worth (CPA Australia).

The two firms at the start of this article have the same fees. What separates them is that one owner is focused on the nine areas, and the other isn’t.

Whether you’re looking to go or looking to grow, the number is worth knowing before you need it. The Practice Value & Readiness Scorecard steps through all nine factors in about ten minutes and gives you an indicative range against current market benchmarks. It’s free, it’s confidential, and it asks for no identifying details about your firm.

 Get the Practice Value & Readiness Scorecard

Dean Marinac is a Certified Professional Business Broker and a member of the Australian Institute of Business Brokers, with more than twenty years working alongside the accounting profession. Growth Generation Commercial Group specialises in the confidential sale of accounting and professional services practices across Queensland, Victoria and New South Wales.

This article is general information only and does not constitute financial, legal, taxation or valuation advice. Indicative value ranges reflect general Australian market conditions and will not apply to any particular practice.