Key Questions Buyers Ask When Evaluating a CPA Firm for Sale

The term "Mergers and Acquisitions," or "M&A" for short, is frequently used as a catch-all. Yes, the M&A industry is full of acronyms. Fundamentally, M&A is just the buying and selling of companies. It goes without saying that you cannot sell unless there is a buyer. Buyers in the M&A space can be individuals, investment groups, or businesses. Sellers have the option to transfer all or a portion of their company, including stock, assets, and occasionally liabilities. 

Unlike in many other industries, the terminology used in M&A is clear: buyers acquire, sellers sell. Strategic buyers, or businesses purchasing other businesses to increase their market share, capabilities, or footprint, have become much more prevalent in recent years. 

In 2024, strategic buyers accounted for approximately 78.1% of M&A transactions in the accounting services sector. These buyers, often other accounting firms, are consolidating to scale operations and expand service offerings. 

Many current owners of Accounting and CPA firms have taken notice of this increase in acquisitions and are searching for CPA firms for sell as part of their expansion strategy. What do buyers look for in a target company (CPA Firms for Sale), what metrics are taken into account, what are the steps involved in the entire transaction, and what kinds of questions do buyers ask? Whether you’re acquiring your first firm or your fifth, knowing what to expect can give you a significant edge in diligence, negotiation, and integration.

What to Consider Before Acquiring an Accounting Firm

Acquiring a CPA firm involves more than just gaining clients; it also entails gaining operational underpinnings, relationships, and systems. As a buyer, you should consider the company's underlying stability and scalability in addition to the numbers.

Important things to think about are:

• The rate of client retention and the amount of recurring business
• Whether important client relationships are directly related to the seller
• Staff capabilities and the possibility that they will remain after the transaction
• The existence of workflows, processes, and contemporary software tools that are documented
• Client concentration risk i.e how many client accounts contribute for 5%-10% or more of revenue.

You can determine if the company is profitable, transferable, and growth-ready by comprehending these dynamics.

Many buyers start the process with the knowledge that "CPA firms are valued at 1x revenue," but this is more of a benchmark than an actual valuation technique. Normalized cash flow methods such as Seller's Discretionary Earnings (SDE) or adjusted EBITDA, are used by serious buyers. Here is a detailed analysis of the factors for better understanding:

1. Revenue & Profitability: Key Valuation Drivers

Annual Revenue

• CPA firms are commonly valued using a revenue multiple.
• Typical valuation ranges from 0.8x to 1.5x of annual gross revenue.

EBITDA

• Higher net profit margins significantly increase a firm’s value.
• Firms with net margins above 20% are especially attractive to buyers.

Billing Rates & Realization

• Firms that convert more billable hours into actual revenue (i.e., high realization rates) are more valuable.
• Higher billing rates and strong collection efficiency drive up price and perceived stability.

In short, buyers should look for valuation drivers that display consistent, transferable profit—not just top-line revenue.

2. Client Base & Retention Risk

Client Concentration

• Firms with a diverse client portfolio are more stable and valuable.
• Heavy reliance on a few clients poses a concentration risk and may reduce valuation. No single client should exceed 10–15% of revenue.

Monthly or Annual Contracts

• Long-term or recurring contracts, such as annual tax or bookkeeping services, enhance predictability and value. Multi-year engagements provide revenue stability.

Client Age & Firm Type 

• Clients in industries with complex financial needs (e.g., tech, healthcare, startups) can raise a firm’s worth.

Retention Rates

• Firms with 90 %+ client retention demonstrate strong relationships and service satisfaction.
• Buyers should know that the clients will stay, that revenue won’t vanish overnight, and that the relationships are transferable.

3. Staff & Transition Plan

Key Employees Staying

• A seasoned, loyal team committed to staying after the sale helps maintain continuity and client trust.
• This stability increases the firm's value and reduces transition risk.

Owner Involvement

• If the owner is heavily involved in client relationships, there's a higher risk of client attrition post-sale.
• Buyers prefer firms where client relationships are distributed among staff.

Compensation Structure

• A well-balanced payroll, offering competitive wages without bloating expenses, makes a firm financially healthier and more attractive.
• Avoiding excessive overhead boosts profit margins and valuation.

4. Operational Efficiency & Technology

Accounting Software & Automation

• Firms leveraging cloud-based platforms and automation tools demonstrate modern, scalable operations.
• These technologies reduce manual work, improving accuracy and efficiency.

Paperless Operations

• A fully or largely digital workflow signals streamlined internal processes and adaptability.
• Buyers favor firms with minimal reliance on paper-based systems.

Client Portals & Cybersecurity

• Secure client portals, data encryption, and robust cybersecurity protocols protect sensitive data and boost client trust.
• Tech-forward firms are more appealing to modern buyers and command higher valuations.

5. Growth Potential & Niche Services

Specialized Services

• Firms offering high-value services such as tax advisory, forensic accounting, or firm consulting are more sought after.
• These specialized offerings often result in higher valuation multiples.

Growth Trends

• A history of consistent revenue growth (e.g., 5%+ annually) reflects strong firm momentum.
• Buyers are more willing to pay a premium for firms with proven upward trends.

Industry Specialization

• Practices that serve high-growth sectors like technology, healthcare, or real estate often sell at a premium.
• Industry expertise adds strategic value and positions the firm for continued success.

6. Geographic Location & Market Demand

Urban vs. Rural

• Firms located in urban or high-demand metropolitan areas typically sell at higher valuation multiples due to greater client density and growth potential.
• Rural firms may face lower demand but can offer stability and lower overhead.

Regional Market Trends

• Local economic conditions, growth of key industries, and competitive landscape directly affect a firm's attractiveness.
• A strong regional market with limited competition can enhance a firm's market position and value.

7. Deal Structure & Payment Terms

Upfront Payment vs. Earn-Outs

• Buyers often pay less if the seller stays on for a transition period and earns payments based on future performance.

Seller Financing

• If the seller finances part of the deal, they may ask for a higher price.

Asset Sale vs. Stock Sale

• Asset sales (client lists, goodwill) are more common and may be taxed differently than stock sales.

19 Common Questions to Ask When Buying a CPA Firm

Buyers will ask different questions at different stages while buying a CPA firm. Brokers will have questions, banks will have questions, and landlords will have questions. At the beginning of the process, buyers' questions will be more general and become more specific once they have completed some due diligence. Most questions are not hard to answer.

1. Please Tell Me a Little About Your CPA Firm

• The type of services your firm provides.
• The number of clients you currently serve.
• Your average billing rates for different services.
• The history and quality of your client relationships.
• Retention rate and client satisfaction levels.

2. Why Do You Want to Sell Your CPA Firm?

• Retirement (e.g., age, Medicare eligibility, years in the field)
• Health issues

3. What Are Your Plans Post-sale?

• Will you be retiring?
• Will you remain in the same area?
• Are you transitioning to another job? If so, where and when?
• How much time and support will the seller be willing to provide during the transition period?
• Will the seller be available to help introduce the client and staff?
• What specific areas of support will they offer (e.g., client onboarding, software training, client communication)?
• What are their expectations for the duration of this support?

4. Tell Me About Your Employees

• The seller should know how long each employee has worked at the firm.
• Be aware of employees' approximate ages.
• Know the educational levels of the staff.
• Assess if any staff could be a competitive risk to the buyer.
• Consider if any long-term employees are nearing retirement.
• Identify if any employees aspire to acquire or take over the firm.

5. Questions on Client Concentration

• What percentage of revenue comes from the top 5 clients?
• Does any single client account for more than 10-15% of annual revenue?
• How long have the top clients been with the firm?
• Are the top clients under contract or engagement letters?
• Have there been recent losses or complaints from major clients?

6. Questions on Client Tenure

• How long have your top 10 clients been with the firm?
• What’s the average client retention period?
• Have any major clients left in the last 3 years? Why?
• Are there long-term contracts or engagement letters in place?
• How loyal are your clients to the firm vs. individual partners?
• Are there clients with known succession or exit risks?

7. Key Questions to Ask About Employment Contracts

• Does the contract include non-compete clauses, non-disclosure agreements, and non-solicitation clauses? 
• Are there renewal provisions or termination clauses? 
• Are there clauses about salary increases, bonuses, or other compensation benefits?
• Do the contracts align with the new ownership's goals and objectives?

8. Questions on Staff Agreements

• Do staff have non-compete or non-solicitation agreements?
• Are any staff planning to retire or leave soon?
• Is there a formal incentive or bonus structure in place?
• What is the average staff tenure?
• How is client work divided among staff or partners?

9. Compliance Issues

• Has the firm ever faced disciplinary action or lawsuits?
• Are all licenses, certifications, and insurance current and valid?
• Have there been any IRS, PCAOB, or state board audits or findings?
• Are there any pending legal or regulatory issues?
• Is your compliance process (e.g., for tax filings or attest work) documented?
• Are engagement letters and client files maintained to meet compliance standards?

10.What Kind of Clients Do You Have?

• Briefly describe the nature of your client base.
• Highlight any specific industry concentration (e.g., 50% in healthcare).
• Note any language-specific segments (e.g., 30% Japanese-speaking clients).
• Mention if top clients represent a significant portion of revenue (e.g., top 2 clients make up 20% of gross revenue).
• Focus on details that would matter to a potential buyer assessing client risk and diversity.

11. What is Your Description of The Perfect Buyer for Your CPA Firm?

• Clearly define the ideal buyer beyond just financial capacity.
• Mention preferred personality traits (e.g., approachable, detail-oriented, trustworthy).
• Include desired professional experience (e.g., background in tax or audit).
• Specify an age range if relevant to client relationships or succession planning.
• Emphasize alignment with the firm’s culture and ability to maintain client trust.

12. Questions on Revenue Seasonality

• What percentage of annual revenue is generated during tax season?
• Is the firm dependent on tax preparation, or does it have year-round advisory/bookkeeping revenue?
• Are there monthly or quarterly revenue trends available for the past 3–5 years?
• What is the monthly or quarterly client volume and workload distribution?
• How are staffing and expenses managed during off-season months?
• Are there opportunities to increase off-season revenue (e.g., through payroll, audits, consulting)?

Watch what Sarah Dobek, an expert in accounting firm growth strategy, has to say about accounting firms and the new sales era.

13. What Are Your Expectations of a Broker?

• Do you expect the broker to bring a buyer to the table simply?
• Are you looking for someone to negotiate the best possible price?
• Is your priority ensuring the process is conducted in an organized and efficient manner?
• What level of involvement do you expect the broker to have throughout the sale?
• Are you prepared to answer follow-up questions and collaborate closely with the broker for a smooth transaction?

14. What Are Your Firm’s Financials?

• Buyers will thoroughly assess your financial records to determine profitability and long-term viability.
• Ensure you have clean and organized financial statements (profit & loss statements, balance sheets, tax returns).
• Be prepared to explain any irregularities or fluctuations in income or expenses.
• Highlight important financial indicators like average revenue per client and overall profit margins.

15. How Does Your Firm Acquire New Clients?

• Buyers want to know how you attract and keep clients.
• Share your marketing strategies (referrals, digital marketing, networking).
• Highlight successful campaigns or partnerships.
• Mention your firm’s community reputation and competitive advantages.

16.What Role Will You Play During the Transition?

• Be clear about your willingness to help during the transition period.
• Specify the length and scope of your involvement (e.g., introducing clients, training).
• If you’re not staying on, explain how you’ll ensure a smooth handover.

17. What Are Your Firm’s Operational Processes?

• Provide an overview of your daily workflows, software systems, and staff roles.
• Highlight any unique processes or efficiencies that set your firm apart.
• Be prepared to discuss how you manage client relationships, deadlines, and compliance.

18. What Are the Growth Opportunities for the Firm?

• Highlight new technologies or tools that could improve operations or expand offerings.
• Share any growth strategies or expansion plans you’ve considered but haven’t executed yet.
• Have you considered offering Client Accounting Services (CAS), like bookkeeping or virtual CFO?
• What potential is there for expanding into firm advisory services?
• Are there any untapped niche markets (e.g., medical, real estate, e-commerce)?

19. What Are the Terms of the Sale?

• Be open to flexible payment structures like earn-outs or seller financing.
• Clearly communicate your expectations, including price, terms, and any sale contingencies.
• Set realistic conditions to ensure transparency and smoother negotiations.

Benefits of Buying a CPA Firm

You leverage the existing revenue from an existing CPA firm. Rather than trying to start the firm and then generate revenue, you just jump in, and now you have revenue. When you buy a CPA practice, you buy the entire industry, including the firm plan. You can keep that plan going to have a solid revenue stream immediately.

Buying an established CPA firm is one of the best ways to enter and/or grow your practice in the accounting field. Unlike starting a practice from scratch (which is generally slow and uncertain), buying an established firm comes with immediate operational benefits. 

From cash flow, existing client relationships, trained staff, to more growth opportunities, buying an accounting practice provides significantly more benefits beyond simply taking ownership of an accounting practice. Here are some benefits of buying a CPA firm:

Trained and Established Staff

When a CPA firm's sales go through the standard procedure, they are often sold with their staff intact. The new owner simply continues doing the work, and the staff continues doing their jobs and gaining experience. 

• You benefit from having trained staff. 
• You do not waste and/or spend valuable time and resources training new employees. 
• The staff members already have a history of things that work and things that don't work, and usually have a relationship with the clients. 
• In addition, having trained staff can create consistency for clients during the change in ownership, which adds significant value to CPA firms for sale.

Immediate Access to Established Clients

A CPA firm is only as good as its clients. Unfortunately, getting and retaining clients is one of the most difficult, time-consuming, and costly aspects of running a CPA firm. Many people who start their firms get so caught up in marketing and reaching out to new clients that they don't make the time to do the things they enjoy. 

• Acquiring a CPA firm means acquiring the client list; you have your built-in clients from day one and can continue to add to those clients, but you don’t have to chase down new clients to keep the firm moving forward because you have established clients. 
• This is one of the biggest advantages of exploring CPA firms for sale or even a virtual CPA firm for sale, where the client base is already nurtured and operational, saving time and effort in the startup phase.

Opportunities for Strategic Alliances

Given that an existing CPA firm is established, you can cross-sell and form alliances with other firms. A CPA firm can partner with another local firm, say a law firm, and share clients and ideas. It is a lot more challenging to cross-sell when you first start because you don't have clients or revenue.

• One key benefit of considering a CPA firm sale is the opportunity to immediately create strategic partnerships, given the firm's existing reputation and clients.
• Many CPA firms for sale already have informal networks or alliances that a buyer can build on immediately. 
• New firms cannot provide this same opportunity. Acquiring CPA firms for sale enables buyers to assess not just the firm's financial performance but also the prospective growth paths resulting from cross-industry collaboration. 
• A CPA firm sale may allow seller firms to create a presence in markets and clients that may not have been accessible otherwise.

How MYCPE ONE Helps Accounting and CPA Firms

MYCPE ONE has focused the past ten years on changing the uniqueness of the leading mechanism of growth, scale, and success for CPAs and accountants. MYCPE ONE is a growth strategy partner. Our all-in-one ecosystem meets client needs while managing modern expectations. We support firms in building cost-effective offshore teams, accessing great talent, improving compliance, and gearing up for changes in the status quo.

In terms of how MYCPE ONE provides value:

Offshore Team Building

We will help firms strategically grow bigger with a world-class and dedicated offshore F&A Team.  We have a trusted solution offering to build incredible teams for over 1,000 CPA firms and accounting firms.

Talent Acquisition

Firms have endless options and limited resources when hiring talent that is available globally or locally. Are firms really leveraging a dedicated strategy to onboard professionals who align with their mission and can see it through?

Mergers & Strategic Expansion

MYCPE ONE promotes firms towards change when navigating M&A transactions and seeking growth via M&A.  We support advisory and execute to a successful close on M&A.

CPE & Learning Solutions

With the largest library of CPE (15,000+) courses for compliance and lifelong learning, we provide the greatest resource that over 250,000 professionals depend upon. We also support over 2000 firms with L&D.

Marketing & Digital Presence

Our presence is digital, and we are looking to improve and elevate your visibility and credibility for both marketing projects and full-scale marketing agencies.

Conclusion

Whether you're buying your first firm or expanding your firm, the marketplace for CPA firms for sale is enormous and offers tremendous opportunities. As a buyer, your success in buying a CPA firm is dependent on, among other things, the following: due diligence, proper valuation of the firm you wish to acquire, and the right plan to transition the firm into your current operations.

By engaging with MYCPE ONE, buyers will benefit from a preferred vendor marketplace of CPA firms for sale and experts who can help them through the entire deal, from finding suitable targets to the final contract and onboarding. We provide clarity, compliance, and certainty to buyers, from solo practitioners to multi-office acquirers, looking for a virtual CPA firm for sale.

FAQs

About the Author

Saul Sony

Saul is a leading expert in partnerships, content strategy, and M&A advisory for the accounting and professional services industry. He specializes in creating impactful learning content, fostering strategic partnerships, and driving firm growth through insightful tax strategies and dealmaking. Saul helps professionals scale their practices, navigate industry shifts, and maximize opportunities in accounting and CPE-focused initiatives.