Why Professional Firms In Other Industries Sell for More — and How CPA Firms Can Catch Up

(Sources: First Page Sage, HedgeStone, The CPA Journal, Clio, The Law Practice Exchange, Microcap.co) 

Why CPA Firm Multiples Lag Behind 

At first glance, you might think other industries are simply more “valuable.” But the truth is more practical.

They’ve mastered four disciplines that buyers reward: 

1. Recurring revenue – Predictable, subscription-style income instead of one-off engagements.
2. Transferability – Systems and teams that operate independently of the founder. 
3. Scalability – Processes that can handle more clients without adding chaos. 
4. Profitability – Strong margins built through pricing power and efficiency. 

A consulting firm with solid retainer income and trained delivery teams might trade at 2× revenue. A similarly sized accounting practice that’s heavily owner-driven and deadline-bound might fetch 1× or less. 

It’s not the profession that’s undervalued — it’s the design of the business. 

The SDE Illusion: When “Profit” Isn’t Profit 

Here’s a reality many firm owners overlook: high Seller’s Discretionary Earnings (SDE) don’t always signal a valuable firm. 

I often see firms with $1 million in revenue claiming $400,000 in SDE — but that “profit” exists only because the owner is logging sixty-hour weeks and wearing six hats. 

If that same owner hired competent staff and worked a normal schedule, true profit might drop to $250,000. 

And that’s the number buyers will use when applying realistic valuation multiples — often 3× to 4× EBITDA, not based on inflated SDE. 

High SDE earned through personal grind isn’t a strength; it’s a red flag. It signals a business that depends on you, not one that can thrive without you. 

And buyers don’t pay premiums for exhaustion. 

How to Build a Firm Worth More 

Here’s what high-value service firms (in any industry) do differently — and how CPA firms can follow suit: 

• Turn compliance into continuity. Bundle tax, accounting, and advisory into recurring monthly packages. 
• Document and delegate. Systematize deliverables so client satisfaction doesn’t depend on one person. 
• Communicate proactively. Clients shouldn’t have to chase updates; set the rhythm. 
• Specialize deeply. The narrower the niche, the higher the retention and pricing power. 
• Track what matters. On-time delivery, client satisfaction, and recurring-revenue ratio — these metrics drive valuation more than volume. 

These are operational habits, not marketing slogans. 

And the payoff is real: firms that implement them see valuations climb — sometimes double what traditional practices command. 

So — Are Multiples Higher Elsewhere? 

Often, yes. But not because those industries are inherently better. 

They’ve simply operationalized the traits buyers prize: recurring, transferable, scalable, and profitable. 

Bring those traits into your firm, and your multiple can look a lot more like theirs. 

And that’s exactly what I’m on a mission to change for the accounting industry — helping CPA firm owners build practices that run smoothly, serve clients exceptionally, and command the valuations they truly deserve. 

Your Next Step 

If you’re ready to see what that could look like in your own firm, join me for my upcoming live session: 

The Exit Readiness Workshop™: How to Double Your Firm’s Valuation — and Exit on Your Terms 

Because the next generation of firms won’t win by working harder —they’ll win by building smarter:
predictable, transferable, and built on excellence. 

Register for The Exit Readiness Workshop™