How to Value an Accounting Firm or CPA Practice

Accounting firms and CPA practices in Illinois are most commonly valued at 0.9x to 1.3x annual gross revenue — a longstanding industry convention. A firm billing $800,000 annually might sell for $720,000–$1,040,000. SDE-based multiples (2x–4x) are increasingly used for larger, more profitable practices, particularly those with strong non-tax service lines.

Client Retention Is Everything

The core risk in any accounting firm sale is client attrition following the ownership change. Buyers discount heavily for firms where client relationships are personal to the selling CPA with no relationship to staff or associates. A well-transitioned firm with multiple client-facing staff, documented engagement files, and a structured client communication plan will retain far more clients — and command a higher price.

Revenue Mix

Tax-season-only practices are less valuable than firms with year-round advisory, bookkeeping, or payroll revenue. Monthly recurring revenue from bookkeeping and CFO services has become a major value driver, as it reduces the seasonal revenue spikes that make accounting firms difficult to finance and manage for new owners.

Most accounting firm sales in Illinois involve some form of seller transition support — typically 6 to 24 months of employment or consulting to facilitate client introductions and knowledge transfer.

How Illinois buyers put a number on how to value an accounting firm or cpa practice

This page is the valuation guide. It is not the sale-process playbook. Seller’s discretionary earnings (SDE) is the cash a full-time working owner can take after you normalize the books. Start with the tax return. Add owner pay and one-time costs. Subtract the wage you must pay to replace the owner.

Buyers often talk 1x–1.5x revenue on small CPA books; this business uses 2.5x–4x SDE as the planning band next to other Main Street shops. Recast after a market-rate CPA if the seller still signs every return. Pull one-time catch-up books and any litigation-support year. Realization and write-offs tell the truth. A book that is 90 percent personal 1040s in March is not a 4x advisory firm.

Planning band on this vertical: 2.5x–4x SDE. That is a range, not a quote. BizBuySell’s Q2 2026 Insight Report showed a 2.7× cash-flow multiple across all reported closed deals. Do not use that marketplace average as this shop’s appraisal.

A worked planning example (illustration)

Illustration only — not a quote for any Illinois shop. A accounting firm whose tax return shows $232,000 of net profit is not worth $232,000 × a rumor multiple.

Add back the owner’s $98,000 W-2 and payroll tax, $24,500 of discretionary benefits, $10,000 of accepted one-time cost, and $6,500 of personal expenses that a buyer will not run. Then subtract $91,000 of replacement labor if the owner still diagnoses, sells, or closes the books.

Adjusted SDE in this illustration is $280,000. At 3.25x, enterprise value is $910,000 before debt, working capital, holdback, and tax.

SDE line items buyers actually use

1. Reported net profit (tax return, not the marketing P&L)
2. + Interest expense
3. + Income taxes (not payroll, sales, or property tax)
4. + Depreciation and amortization
5. + Owner W-2, bonuses, and payroll taxes on the owner
6. + Discretionary owner benefits that a buyer will not keep (auto, personal travel, family on payroll with no role)
7. + Accepted one-time or non-recurring expenses
8. − Market-rate replacement labor for owner work that will not transfer
9. = Seller’s Discretionary Earnings (SDE)

What moves the multiple up or down

• Recurring CAS or business-tax retainers
• A staying CPA who can sign
• Realization that survives a rate conversation
• Low 1040-only concentration
• Clean IDFPR and peer-review status

What does not transfer with the price

IDFPR CPA licenses are personal and do not transfer. Firm names and “CPA” use are regulated. Peer review, if they do attest work, sits on the firm and the named partners. A non-CPA buyer cannot simply own attest work under Illinois accountancy rules. Client businesses transfer only with engagement-letter and confidentiality discipline.

Diligence that changes the number

• Fee mix: 1040, business tax, monthly CAS, attest
• Realization, write-offs, and aged WIP
• Who signs, who is staying, and IDFPR firm status
• Client concentration and whether the seller is the relationship
• Software (QBO, UltraTax, CCH) ownership and data export
• Peer-review status if they do attest

When you want the close calendar instead of the math, read how to sell. This page stays on value.

Documents to gather this week

1. Three years of signed business tax returns and matching P&Ls
2. Year-to-date P&L, balance sheet, and three months of bank statements
3. Current lease, amendments, and a plain-English remaining term
4. License and permit list, including who holds each card
5. Top-customer concentration (names redacted until an NDA)

A simple Illinois close calendar

Plan six to twelve months from cleanup to close on a prepared Main Street deal. Start CBS-1 and any Chicago or Cook notices at letter-of-intent, not the week of funding. Landlord consent often takes longer than the lender.

Related pages on this site

• Seller pricing page for this vertical
• How to sell
• Illinois business valuation
• Confidential consult

Educational only — not legal, tax, or a formal appraisal. Confirm bulk-sale notices, licenses, and tax allocation with counsel and a CPA.