What’s your firm really worth?
Maximizing your firm’s value to prepare for an eventual succession is absolutely crucial, whether you’re planning on exiting in one year or ten. So it comes as a surprise that 43% of accounting firms lack a succession plan. Luckily, we’ve got some advice to help you catch up and maximize your firm’s value.
In this revealing episode of The Modern Firm® podcast, succession planning experts Todd Steinberg and Chris Tabb shed light on:
- Why most accounting firms are caught off guard when planning for the future.
- Key strategies for succession planning (including insider knowledge about the most attractive client mix to catch potential buyers’ attention.)
- Why private equity isn’t just for the “big” firms anymore.
Tune in for a fascinating journey through accounting firm valuations and exit strategies.
Watch the full episode on YouTube or Vimeo.
Episode highlights
- 🎯 Succession planning gap: Research shows 43% of accounting firms lack a succession plan, highlighting a critical need in the profession.
- 💰 Valuation factors: Location, client mix, profitability, and transition assistance are key elements that determine a firm’s market value.
- 📈 Multiple ranges: Most firms sell between 1-1.5x revenue, with specialized services like payroll and wealth management commanding higher multiples up to 2-3x.
- ⏰ Timing considerations: Plan for approximately one year to sell and another 1-2 years for transition, making early planning crucial.
- 🤝 Private equity impact: While PE firms are actively pursuing acquisitions, traditional firm-to-firm deals still dominate the small to mid-size market.
- 📊 Service mix matters: Monthly recurring revenue and advisory services typically command higher multiples than traditional compliance work.
About The Modern Firm podcast
This episode of The Modern Firm podcast was brought to you by Rightworks. It was co-moderated by John Mitchell, Culture and Workforce Advisor at Rightworks, and Darren Root, Founder of Rightworks Academy and Growth Strategist at Rightworks, with Todd Steinberg, Founder and Managing Partner of Thrive Financial Group, and Chris Tabb, Head of Strategy and Development at RightExit, as the guests.
For more episodes, recaps, and resources, visit rightworks.com/resources/podcasts.