Selling your accounting practice is the one transaction most CPA firm owners handle from the wrong side of the desk, and the Oregon market has grown more complicated over the past several years. Staffing shortages have thinned the pool of internal successors down to almost nothing in firms under five million in revenue. Private equity money has moved into the Pacific Northwest and changed what a competitive offer looks like. The one times gross revenue rule of thumb that circulated for decades describes fewer and fewer of the deals closing in the Willamette Valley today, and owners who start the process the same year they want out usually accept whatever the market hands them.
The conversation below is with the owner of a Salem CPA firm that bills a little under two million dollars a year across roughly four hundred clients. His answers cover valuation, buyer screening, staff notification, client communication and the two year transition period where most of the money in these deals gets won or lost.
Table of Contents
Deciding That Selling Your Accounting Practice Was the Right Move
You’ve had buyers calling for years. What made this round different?
The calls never stopped. I’d get two or three a month from regional firms out of Portland and Boise, plus a handful from private equity groups that had already rolled up practices in Washington. I ignored all of them until my managing senior gave notice in February of last year, which forced me to look at what I’d built without her sitting in the middle of it. What I saw was a firm that leaned on three people, and two of us were past sixty. Deciding that selling your accounting practice makes sense comes down to whether you can still staff the thing five years from now, and my honest answer was no.
Did the staffing problem surprise you?
It shouldn’t have, though it did. I’ve been on the state society’s membership committee off and on since 2011, so I’ve watched the pipeline shrink in real time. We had a posting open for a senior tax associate for fourteen months, and the three candidates who made it to a second interview all wanted full remote and about fifteen percent more than I was paying my most tenured person. I could have met that number for one hire without wrecking the model, but I couldn’t have met it for the four hires I’d need by 2030. That math is what pushed me from thinking about a sale to calling a broker.
Walk me through the first ninety days after you decided.
I called two brokers who specialize in accounting firm sales on the West Coast and interviewed both of them the same week. One wanted to list me immediately at a number I knew was optimistic, and the other spent an hour asking about my client mix before he’d talk price at all. I went with the second one, which cost me about four months of prep work I hadn’t budgeted for. He put me to work that spring, so I spent most of it scrubbing a client list I hadn’t looked at hard since about 2016, splitting revenue out by service line and writing down which of us owned which relationship. He wanted three years of realization rates by staff member on top of that, which ate the better part of a month for my office manager. None of it was difficult work, though it wore on me, and it’s the reason the buyer we landed moved as fast as he did once he got his hands on the file.
What did the prep work uncover that you didn’t already know?
Two things stung. My write-offs on monthly bookkeeping clients were running near nineteen percent, which meant a chunk of my recurring revenue was worth considerably less than the invoice suggested. The second one was concentration. My four largest clients, all of them Willamette Valley ag and food processing operations I’d picked up in the late nineties, made up about twenty-two percent of the top line. Every buyer who looked at the firm asked about those four accounts before anything else, and one of them walked because the founders of my biggest client are in their seventies with no succession plan of their own.
Putting a Number on a Salem CPA Practice
Let’s talk price. What’s a firm like yours worth?
The rule of thumb people repeat is one times annual gross revenue, and that number’s been repeated so long it’s become a kind of folk wisdom in this profession. The reality in our market runs from about eighty cents on the dollar up to maybe a dollar fifteen, and the spread depends on things a seller can control if he starts early enough. Recurring compliance work with clean realization prices higher than project consulting. A firm where the owner personally handles the top thirty relationships prices lower than one where staff own the day-to-day contact. My letter of intent came in a shade above one times gross, though the structure matters more than the headline.
Walk me through how you get paid.
Twenty percent of the purchase price sits in a retention holdback measured over the first twenty-four months after closing. If clients representing more than a defined slice of revenue leave for reasons tied to the transition, the buyer keeps a proportional piece of that holdback. The rest comes as cash at closing plus a seller note carried at seven percent over five years. I pushed hard to shorten the look-back window from thirty-six months to twenty-four and gave up about two points on the note rate to get it. Anyone comparing offers needs to model the cash flow rather than the sticker number, because two deals with identical prices can differ by six figures in what you take home.
Did you consider selling internally instead?
I ran the numbers twice. My two remaining seniors are good technicians and neither one wanted to sign a personal guarantee on that much debt, which killed internal succession before it started. That’s common enough that it barely registers as news anymore. A staff buyout works when you’ve spent a decade grooming somebody and letting them build equity in stages, and I didn’t do that groundwork in my forties because I assumed I’d practice until I dropped.
You had multiple offers. How did you pick?
Eleven parties signed the confidentiality agreement and my broker cut that to three before I met a single one of them. He screened for technical fit and financial capacity ahead of price, meaning he wanted proof the buyer could handle my client mix and fund the deal without a contingency I’d end up carrying. Two prospects couldn’t produce a lender commitment and one had never touched an agricultural return in his career, so none of them reached my calendar. Screening that hard up front cost a few weeks and kept me from negotiating with people who were never going to close.
Did the highest offer win?
No. The top number came from a private equity backed platform that had bought four Pacific Northwest firms in eighteen months, and it landed roughly eight percent above the next bid. Their model calls for standardizing software, repricing the bottom third of the client list and moving bookkeeping to a shared service center outside Oregon. My clients drive to this office in Salem and expect to sit across from somebody who knows their operation, so I’d have been cashing a bigger check while handing four hundred people to a system built for somebody else. Fit belonged in the screen alongside the money.
Who did you go with?
A three-partner firm in Eugene with about forty employees and a book that looks a lot like mine. The youngest partner is thirty-eight and he’d been through two acquisitions on the buying side already, which showed in how he handled the diligence. He asked about my staff’s compensation and non-competes in the first meeting rather than the fourth. I read that as a signal he’d thought about the part of the deal that comes after the wire hits.
What does the transition look like on paper?
I stay on for twenty-four months at a reduced schedule, roughly eight hundred hours in year one and half that in year two. My compensation during that stretch is separate from the purchase price, which is a distinction plenty of sellers miss. The first six months are almost entirely introductions, meaning I sit in on meetings and hand relationships over in person rather than by letter. My broker told me the deals that fall apart usually fall apart here, and the difference between a retention rate of ninety-two percent and one of seventy percent is almost never the price on page one.
When did you tell your people?
After the letter of intent was signed, before diligence started. I told all seven of them in the same room on a Tuesday morning, then met with each one individually over the following two days. Two of them cried, one asked whether her health coverage would change and the youngest one asked whether she should be looking for another job. I’d negotiated employment offers for every member of the staff as part of the LOI, which meant I could hand out real terms in those conversations instead of reassurances. Anybody who tells you to keep the staff in the dark until closing has never watched a senior associate walk in October with three hundred returns coming.
How are you telling the clients?
We’re doing that in waves starting in November. My top forty get a phone call from me personally, followed by a lunch or an office visit with the partner who’ll take over the relationship. The next tier gets a call, and everyone else gets a joint letter over both signatures plus an open house at our office in January. My broker pushed back on my original plan, which involved telling everyone by letter at the same time, and he was right to push. The four or five clients most likely to shop the change are the ones who’ve known you longest, and a letter reads like an announcement rather than an invitation to stay.
Timing an Accounting Firm Sale Around Tax Season
Does the calendar matter as much as people say?
More than people say. I started the process in March, which was a mistake I’d undo if I could, because I lost six weeks of momentum to extensions and couldn’t give the broker a clean set of numbers until late May. The right window to begin is May or June, with the goal of signing by October and closing between November and January when the books are current and nobody’s buried. Buyers evaluating accounting firm sales want to see a full year of financials that haven’t been distorted by an owner running flat out through April.
What He’d Do Differently
Last question. What’s the advice you’d give the version of yourself from five years ago?
I’d get the relationships off my desk sooner. Too much of this firm ran through me and that cost me money on the price, which I could have fixed back in 2019 by putting a staff person in every meeting and handing them the follow up calls. The other thing is to call a broker two or three years out instead of the month you decide. Mine gave me a list of fixes worth another sixty or seventy thousand, and I got through about a third of it. That one still bugs me a little, though I’ve made my peace with it, since I’m not going to spend the rest of my sixties arguing with somebody about realization rates.
He walked me out past a wall of framed client photos going back to the Clinton administration, including a hop farm near Independence he’s filed for since the second Bush term. He’d told me earlier that he doesn’t feel sentimental about the sale, which lasted right up until he stopped in front of that photo. Any Oregon firm owner thinking about the same road should start the conversation with a broker who works these deals for a living, and should start it well before the year they intend to hand over the keys.
