What’s a CPA Practice Really Worth? A Complete Guide to Valuation and Selling Strategies

Owning a CPA practice is more than just running numbers—it’s about building long-term relationships, managing technology, and maintaining client trust. But when it’s time to sell, what is a CPA practice really worth? Unlike the booming multiples of the 1990s, modern CPA practices are valued at 0.9X to 1.4X annual revenue, averaging around 1.25X.

For a million-dollar practice, that translates to a selling price between $900,000 and $1.4 million. The big question: How do you land at the top end of that range? Let’s break it down.

How CPA Practices Are Valued Today

The formula is relatively straightforward:

Valuation = Annual Revenue × Industry Multiple

But that multiple isn’t fixed. It ranges based on location, technology, and client demographics.

• Urban firms with tech-savvy operations and younger clients fetch closer to 1.4X.
• Rural practices, still reliant on manual processes and serving older clients, sell for closer to 0.9X.

That’s a $500,000 difference on a million-dollar practice, simply due to the setup.

Key Factors That Influence CPA Practice Valuation

If you want to get top dollar, here’s what buyers are looking for:

1. Recurring Revenue
Not all revenue is created equal. Consistent, recurring clients who return for tax preparation, accounting services, and financial planning are highly valued. In contrast, one-time projects or ad hoc consulting add little to the sale price.

2. Location, Location, Location
Urban practices benefit from denser populations and typically charge higher rates. Rural practices, while valuable, tend to command lower fees and face less market demand. Proximity to business hubs can also impact valuations significantly.

3. Technology Integration
The days of paper records and manual bookkeeping are fading fast. Buyers want practices with cloud-based software, digital filing systems, and efficient client portals. Tech-savvy operations reduce transition costs and streamline client servicing.

4. Client Demographics
Practices with younger clients are worth more. Why? They represent long-term revenue potential. Older clients, while loyal, often require succession planning, which can be a risk factor for buyers.

Trends Shaping the CPA Industry

There are over 50,000 CPA firms in America, with more than half owned by baby boomers. As many approach retirement, there’s a wave of firms hitting the market. Here’s what’s changing:

• DIY Software and Outsourcing: TurboTax, QuickBooks, and offshoring are driving down margins.
• Smaller Operations: 90% of CPA firms have fewer than 10 employees, often run by a single accountant.
• Client Loyalty Shifts: Buyers want firms where clients are loyal to the brand, not just the individual CPA. That makes transitions smoother and reduces client loss after a sale.

The result? Buyers are more selective, and firms that can’t demonstrate tech-forward operations or brand loyalty face lower offers.

Selling Price and Payment Structures

How you structure the sale matters.

• Upfront Payments vs. Installments: Practices that demand high upfront costs tend to sell for less overall. Spreading payments out over time, often tied to client retention, can increase total sale value.
• Smooth Transition Planning: If your clients are deeply connected to you personally, it can be hard to transfer that trust. Buyers look for practices where client loyalty is to the firm rather than just the owner.

Consider implementing client transition plans a few years before selling to build firm-wide loyalty.

Role of Appraisers in Valuing CPA Practices

Barat Kenodia, a professional appraiser, stressed that valuing a CPA practice isn’t just about revenue—it’s about understanding the market landscape, recurring revenue streams, location advantages, and technology integration. Appraisers can:

• Provide a starting valuation for negotiation
• Highlight areas to improve for higher sale value
• Connect sellers with business brokers for deeper analysis

Their insights can mean the difference between closing at 0.9X revenue or pushing toward 1.4X.

Maximizing Your Practice’s Value Before You Sell

If you’re planning to sell within the next 3–5 years, now is the time to start preparing:

• Upgrade your tech – Cloud-based software, client portals, and automated reporting make transitions easier.
• Build firm-wide loyalty – Introduce multiple team members to clients to reduce dependency on you alone.
• Diversify services – Adding financial planning or advisory services increases recurring revenue.
• Standardize processes – Consistent client experience boosts buyer confidence.

Final Thought: What’s a CPA Practice Really Worth?

For many, a CPA practice is the culmination of decades of work, relationships, and trust. Its value isn’t just in the revenue it generates—it’s in the systems, client relationships, and technology that keep it running.

If you’re planning to sell, preparation is key. Boosting technology, expanding services, and building client loyalty aren’t just good business practices—they’re value multipliers when it’s time to sell.