What’s a CPA Practice Worth?

In the last 20 years, CPA practices have had bittersweet experiences from two dimensions – software and outsourcing.

Nevertheless, if you are a CPA there are three things that attract buyers –
1. Recurring revenue
2. Location
3. Technology

Value is significantly affected by how much upfront payment the seller wants, and how much is she willing to finance or receive via earnouts. The rule of thumb here is that the more upfront payment demand, the lower the value.

The key to valuing a CPA practice is to understand the difference between the value of the practice and contribution of the professional based on individual relationships. If a practice is heavily dependant on the operator it makes it difficult for a new buyer to acquire and integrate into a bigger practice. Whereas, if a clientbased is loyal to the brand of the practice, it is relatively easy to integrate into a bigger practice.

I hope this episode has helped you understand the value of your practice…

If you like what you heard, be sure to subscribe!

I am starting this channel to educate people on valuations and how to use them to their advantage. 

If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.

Bharat Kanodia, ASA 
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding. 

DON’T FORGET TO FOLLOW:
INSTAGRAM:   / whatsitworthtv  
WEBSITE: http://www.veristrat.com
FACEB00K:   / whatsitworthtv  
LINKEDIN:   / veristratinc.  

EPISODE 5 BLOG: https://www.veristrat.com/blogvaluat...