what a cpa firm is worth

look at the revenue stream. goodwill is another story.

by marc rosenberg
retirements & buyouts

to illustrate a cpa firm’s value, let’s use an example of a plain-vanilla or average firm:

• annual revenues: $6 million.
• six partners with ages spread evenly between 45 and 62.
• average partner income: $350,000.
• ratio of professional staff to partner is 3.5.
• firm is located in a city with a population in excess of 1m.
• clients are all in common industries such as manufacturing, real estate, health care, etc. no niches or specialties.
• services are all traditional annuity types such as accounting and tax.
• the firm’s accrual basis capital, primarily wip and a/r, is $1.2m.

now, let’s compute the value.