If you've asked around about selling, you've heard the phrase "it sells for about one times fees." But one times what, exactly? Here's how recurring-fee multiples actually set an accounting practice sale price in South Africa.
The base: guaranteed annual recurring fees
The multiple is applied to guaranteed annual recurring fees — the ongoing compliance, bookkeeping, tax and management-account work that recurs every year. It excludes once-off jobs, consulting spikes and anything unlikely to transfer to a new owner.
The typical range
Practices generally trade between about 1.0x and 1.5x of those recurring fees. Worked example: a practice with R1.8 million in guaranteed annual fees would typically be valued at roughly R1.8 million to R2.7 million, before deal-specific adjustments.
What moves you up the range
A practice earns a higher multiple when its fees are stable and diversified, its systems are modern, its staff are staying, and it doesn't depend on the owner personally. Buyers pay more for certainty.
What pulls you down
Client concentration, declining fees, an ageing client base, weak record-keeping, or heavy owner dependence all push the multiple toward — or below — the bottom of the range.
Why deals use retention clauses
Because the whole value rests on fees actually staying, most sales tie part of the price to retention over 12 to 24 months. If clients leave, the price adjusts. It protects the buyer and rewards a clean handover by the seller.
Know your number before you list
Understanding the multiple lets you set a credible asking price and negotiate from strength.
