Accountancy Practice Valuations are one of the most common valuation report categories which the Business Valuer Network is asked to work on. There is a constant flow of change of partners in Australia’s accountancy practices as new partners are admitted, older partners phase out and mergers and takeovers occur.
Accounting firms are usually acquired by savvy professionals in the accounting field. Accountancy practice valuations are unusual in that they are not usually valued on a multiple of profits but are instead usually valued on a multiple of recurring fees or billings.
For example, a metro Melbourne accountancy practice valuation may find that the practice is worth 95 cents in the dollar of the $500,000 in fees billed on a recurring basis, whereas a similar-sized practice in Nowra NSW may be valued at 85 cents in the dollar.
The types of fees in accountancy practice valuations is also important. for example, management fees may attract a higher multiple than audit fees.
What to look for in the business valuer who is valuing your accountancy practice?
You need for your accountancy practice valuation is a valuer who:
- specialises in accountancy practice valuations
- is local to where the accountant firm is based
- understands the differing fee strata, locality issues, and leakage issues that are involved in accountancy practice valuation.