Plus: A powerful equation.
By Joel Sinkin
Transition Advisors
When I teach a CPE class on how to value an accounting firm, the first question people ask is what is the multiple? As you likely know, an accounting firm is traditionally sold on a multiple of revenues.
The multiple is just one part of the equation and not a place to end – let alone start – the valuation process. The overall terms must include factors such as how much money if any up front, how profitable is the acquisition, how long is the retention period that impacts the seller’s balance due based on client retention and how long is the payout period?
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