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Valuing an Accounting Firm

How to Value a CPA Firm for Sale

Originally published in the Journal of Accountancy, November 2013
One of the key components of a CPA succession plan is the sale or transfer of the retiring CPA's ownership interest. How is the value of that interest determined? In most circumstances, the value of an owner's interest is different when selling to an external buyer than it is in an internal transaction.
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Pricing Issues for Midsize and Large Firm Sales

Originally published in The Journal of Accountancy, November 2014
It's no simple task for accounting firm owners to figure out how much they should be paid when they are looking to sell. The job is especially complex for firms with at least five owners.
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Pricing Issues for Small Firm Sales

Originally published in The Journal of Accountancy, October 2014
For CPAs looking to sell their accounting practice, it can be a big plus to be in a small firm. That's because small firms generally can command higher multiples than big firms, and external sales usually produce higher prices for accounting practices than internal ownership transfers.
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How to Price an Owner's Interest in a CPA Firm

Originally published in the Journal of Accountancy, December 2014
Dramatically different demographic and market conditions require new strategies to pay for buyouts.
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Mergers and Acquisitions of Accounting Firms

Originally published in The CPA Journal, December 2017 
Mergers and acquisitions are a typical way for accounting firms to grow, expand into new markets, build expertise, and provide for succession. But not all mergers are true combinations of equals, not all firms are ideal matches, and not all acquisitions are structured the same way.
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Alternative Deal Structures for Succession

Originally published in The Journal of Accountancy, January 2014
For CPAs in public practice, the path to retirement usually follows one of two roads - an internal succession or a sale to an external buyer, with the external route offering additional options.
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A Two-Stage Solution to Succession Procrastination

Originally published in The Journal of Accountancy, October 2013
Deal structure provides a path to retirement for CPAs who fear a loss of control or income.
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CPA Firm Mergers: Is It a Buyers' or Sellers' Marketplace?

Originally published in AccountingToday.com April 19, 2012
Like most scenarios that include a buyer and a seller, the marketability of CPA firms adheres to the eternal law of supply and demand. The demand for a practice is heavily based on the size of a firm (in gross revenues) and the location. Depending on demographics and geography, some areas of the U.S. are definitely skewed toward the buyer, while others favor the seller.
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The Great Mystery: How Do Billing Rates and Profitability Affect a Firm’s Worth?

Originally published in the Practicing CPA by the AICPA July/August 2011
When you are buying a CPA firm, historical profit is almost irrelevant. Even less relevant are the partner billing rates. What? How can that be? When establishing the value of any business isn’t its profitability the most important metric to consider? Isn’t partner billing rates the most important way to know if two firms are a good fit?
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Succession Planning--Valuing Partner Equity in Larger Firms

Originally published in the CPA Practice Management Forum, December 2009
Succession planning is the foundation that creates a successful transition of client relationships. This article discusses how to capture and measure the value of the firm once the succession has commenced.
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Valuing The Smaller Accounting Firm

Originally published in the AICPA SMALL FIRM SOLUTIONS, Summer 2008
For many smaller practitioners, their firm is one of their largest assets. They have worked for years to develop and nurture this practice and want to receive a reward for their sweat equity and loyalty. How do you value this asset?
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Valuing and Merging Smaller Accounting Practices

Reprinted with permission from the CPA Leadership Report October 2006
Acquisitions of small accounting practices has become common recently. Small practices are also increasingly becoming purchasers. Know the reasons for increased activity, how deals are structured and what buyers should consider.
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Mergers and Acquisitions
The Questions You Need to Ask - The Answers You Need to Know...

Reprinted with permission from the NATP TAXPRO Quarterly Journal Spring 2006
Lately there’s been a tremendous amount of news about the buying and selling of accounting and tax practices. Regardless of your intentions its important to examine valuation techniques and market evaluations. Here’s some M & A Q & A’s to consider.
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More Than Face Value

Originally published in Insight, the magazine of the Illinois CPA Society August 2005
Are you considering buying or selling your practice? Then you’ll need to understand the criteria for valuing the firm in today’s marketplace. It’s all about variables when it comes to valuing an accounting firm for merger or acquisition.
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Price Equals Value Plus Terms

Originally published in the Journal of Accountancy by the AICPA December 2004
You've worked hard for many years to build equity in your practice. Now you want to sell. Business Valuation (BV) and Practice Succession procedures will help you prepare your practice or share of it for acquisition, but arriving at a final price for your equity will depend, in part, on the art of the deal.
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