"What is my practice worth?" is the first question every seller asks. The short answer: an accounting practice valuation is driven mainly by recurring fees — the predictable, annual fee income that a new owner can rely on.
The recurring-fee multiple
Most practices change hands at roughly one to one-and-a-half times annual recurring fees. So a practice with R2 million in guaranteed annual fees might be valued somewhere between R2 million and R3 million, before adjustments. Turnover that includes once-off or project work is discounted, because it doesn't transfer as reliably.
What lifts the multiple
- Sticky, diversified clients — a broad base with high year-on-year retention.
- Low owner dependence — the practice runs on systems and staff, not just you.
- Clean systems and data — modern software, tidy workpapers, up-to-date records.
- Stable, qualified staff who will stay through the transition.
- Growth — a practice adding clients is worth more than one slowly shrinking.
What lowers it
- Client concentration — if one or two clients make up a large share of fees, that's risk.
- Heavy reliance on the outgoing owner's personal relationships.
- Ageing client base or declining fees.
- Compliance or PI-cover gaps.
Why turnover and profit alone mislead
Two practices with identical turnover can be worth very different amounts. One might be all recurring compliance work with loyal clients; the other, lumpy project fees that could vanish. Recurring fees cut through that.
Get a professional valuation
A defensible, independent valuation pays for itself — it anchors your asking price and gives buyers confidence. AFS offers professional practice valuations as an add-on service.
