Succession Planning

What Your Accounting Firm Is Actually Worth Today

3 min read

Jul 9, 2025 2:22:06 PM

Thinking of selling your accounting firm? Don’t fall for the 1x revenue myth. In a recent episode of Who's Really the Boss? podcast, Marcus Dillon, CPA, and I break down the real story behind firm valuations, deal structures, and how to protect your equity in today’s M&A market. Read below for the full details.

**If you would like to receive CPE for the podcast episode related to this article, visit Earmark CPE.

Beyond the 1x Revenue Rule

Our youngest daughter just graduated from high school, and Marcus and I are officially empty nesters. While we’ve been celebrating this big life moment, we’ve also been reflecting on another major milestone many firm owners are facing: navigating the complex world of accounting firm valuations and M&A.

In a recent episode of our podcast, Who’s Really the Boss?, Marcus and I shared what we’re seeing in today’s deal landscape, and what every firm owner needs to know before entertaining an offer.

The 3 Tiers of Today’s M&A Market

Let’s start with the basics. Not all deals are created equal. Here’s how we break down the current market:

1. Client Block Sales

This is the traditional 1x revenue deal. If a buyer is only acquiring your client list, no team, no systems, no unique processes, this model still holds. But be warned: you lose control post-sale. Your clients, your team, and your systems are now theirs to manage.

2. Acqui-Hires

These deals target smaller firms ($500K–$1M) where the buyer wants your niche expertise. I’ve seen firm owners give up equity when what they really needed was a strategic relationship. There are smarter ways to get support without sacrificing ownership.

3. Business Acquisitions

This is the top tier. If you’ve built a business with real infrastructure like teams, systems, and processes that don’t rely on you, you’re in a different league. But be honest: have you built a business, or just a practice?

The New Math: EBITDA Multiples & Deal Structure

Let’s say you have a $5M firm with 40% EBITDA ($2M in earnings). You might hear about 4–6x EBITDA valuations, which sounds like $8–$10M. But here’s the reality:

Cash at close: $3.5M–$4.9M
Equity in buyer’s platform: ~$3M
Remaining cash: Paid over 2–5 years, based on performance

That equity? It’s often pitched as a golden ticket, “This could be worth $15M someday!” But that’s a big “if.” These inflated numbers are often based on future potential that may never materialize.

The Performance Traps

Here’s where it gets tricky. Many deals come with performance requirements that shift all the risk to you:

10% organic growth for 5 years
40% EBITDA margins
Revenue retention clauses
Clawbacks if targets aren’t met

You could end up working harder than ever, with less control and more pressure.

Why Professional Buyers Have the Upper Hand

Professional buyers do this every day. They have teams of lawyers, analysts, and bankers. Most accounting firm owners? We do this once in a lifetime.

When we helped a friend explore her options, she had six letters of intent within weeks. That’s how fast buyers move. And the language they use—“earnouts,” “EBITDA adjustments,” “equity rollovers”—is designed to shift risk away from them and onto you.

How to Build Your Leverage

You can level the playing field. Here’s how:

Be honest about what you’ve built. Can your firm run without you?
Be proactive. We sent 200 letters to firms in Fort Worth. That positioned us as strategic buyers, not bargain hunters.
Build the right advisory team. You need more than a transaction attorney. You need someone who can interpret the long-term implications of every term.
Maintain optionality. A lean, profitable business gives you the power to walk away.

The Power of Relationships

One of the best parts of our profession is how generous accountants are with each other. We’ve had incredible conversations with firm owners who weren’t selling but were willing to share their journeys.

Sometimes, the support you’re looking for doesn’t require a sale. It comes from mastermind groups, peer networks, and trusted advisors. We’ve built our success on those relationships, and we’re grateful for every one of them.

Final Thoughts

If you’re thinking about selling, or just want to understand your options, know this: you have more leverage than you think. But only if you’re prepared.

Build a business that runs without you. Surround yourself with the right advisors. And don’t be afraid to walk away from a deal that doesn’t serve your goals.

Rachel and Marcus Dillon

Rachel and Marcus Dillon, CPA, own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, Collective by DBA , supports and guides accounting firm owners and leaders with firm resources, education, and operational strategy through community, groups, and one-on-one advisory

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← Transform Your Accounting Firm Post-Tax Season

What Your Accounting Firm Is Actually Worth Today

Beyond the 1x Revenue Rule

The 3 Tiers of Today’s M&A Market

1. Client Block Sales

2. Acqui-Hires

3. Business Acquisitions

The New Math: EBITDA Multiples & Deal Structure

The Performance Traps

Why Professional Buyers Have the Upper Hand

How to Build Your Leverage

The Power of Relationships

Final Thoughts

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