How to sell an accounting practice

The nine steps

1. 1.
   Decide what is for sale and when you leave

   The whole practice or a book within it; the office and lease or just the clients; your last filing season; how long you will stay afterwards. Buyers ask these in the first call, and an open-ended answer costs money: brokers list a seller who plans to remain indefinitely among the factors that reduce price.
2. 2.
   Assemble the numbers

   Three years of profit and loss and tax returns, a fee schedule by client, the top ten clients as a share of fees, staff roles and pay, an inventory of software and files, and an add-back schedule (your compensation, benefits, personal expenses run through the firm) that turns net profit into seller's discretionary earnings. Raise fees to market and clean up receivables in the year before listing.
3. 3.
   Set a range, not a number

   Small practices sell near one times annual fees and about two times SDE; the valuation guide has the sold data, the broker corridors, and an estimator. Sold listings close at 97% of asking on average, so the asking price does most of the negotiating.
4. 4.
   Choose the channel

   A specialist broker (seller-paid success fee, rate not published; see the brokers guide), a marketplace or classified listing, or a free blind listing on accounting8. The routes can be combined; watch the exclusivity clause in any broker agreement.
5. 5.
   Publish a blind profile and qualify buyers

   The profile shows region, fees, mix, staff, and reason for sale, never the firm's name. A buyer signs a confidentiality agreement and shows a credential and financing before seeing the name, the client list, or the financials. Brokers also ask buyers to sign a non-solicit at this stage.
6. 6.
   Take offers and agree the structure

   Price, cash at closing, any seller note or earn-out, the retention mechanism if there is one, the transition period, the non-compete, what happens to staff and the lease, and the purchase-price allocation. A letter of intent usually fixes these and gives the buyer exclusivity for due diligence; Poe Group Advisors argues for skipping the LOI and going straight to a signed agreement with diligence afterwards.
7. 7.
   Due diligence and the buyer's financing

   The buyer reviews the client list, workpapers, and financials under the NDA; their lender wants the same package plus the buyer's credit. SBA lenders average about 60 days from application to funding. Tax return information may be reviewed at this stage under a written confidentiality agreement without client consent (§301.7216-2(n)).
8. 8.
   Sign the asset purchase agreement and close

   The agreement covers payment structure, who collects pre-closing receivables, retention provisions, the non-compete, transition duties, employee terms, representations and warranties, indemnities, closing conditions (lender approval, lease assignment, license transfers), the price allocation for tax, and dispute resolution. Both parties file IRS Form 8594 with their returns.
9. 9.
   Notify clients and transition

   Send the written consent request to every client whose files transfer, in the form your state board requires, and introduce the buyer in person or jointly by letter. Files of clients who object or cannot be reached stay with you. Brokers' transition expectations range from a few weeks (APS) to a full season; larger deals expect two to three years.

The season and the timeline

Every broker describes the same calendar. Nothing happens between late January and mid-April because both sides are filing returns. Sellers list from late April; ProHorizons puts the window at 1 May to the end of September, ABAG says right after 15 April, and Poe Group Advisors notes buyers are quiet in May and June and very active from August. Most closings fall between September and January because a buyer wants to own the practice before the next season’s fees arrive. A bank-financed deal needs about 60 days from application, so Berkshire’s rule is to be under contract by the end of October to close by year-end, and ProHorizons warns that the odds of a bank-financed close drop after 15 October.

Deal structures and who carries the retention risk

The price a seller nets depends on the structure more than on the multiple. The structures in use, with the sources that describe each as typical:

The financing the buyer brings

Most individual buyers use an SBA 7(a) loan: up to $5 million, a term of up to ten years (twenty-five when real estate is included), eligible for a complete or partial change of ownership, at a rate set as prime plus a lender margin. Under the SBA’s SOP 50 10 8, effective 1 June 2025, a complete change of ownership needs a 10% equity injection from the buyer; a seller note counts toward it only if it is on full standby for the life of the loan and makes up no more than half of the injection, so a seller cannot lend the buyer the whole down payment. Lenders that specialize in practice loans quote about 60 days from application to funding and often add working capital to cover the seasonal gap. For a seller this means two things: ask early whether the buyer is pre-qualified, and expect the lender to want your three years of financials, your client concentration, and your retention history as much as the buyer does.

Client files and the 90-day rule

A practice is sold by transferring client relationships, and the client owns the relationship. The AICPA Code of Professional Conduct, interpretation 1.400.205 (effective 30 June 2017), requires a member who sells or transfers a practice and keeps no ownership in it to send a written request to each client whose files are subject to the sale, asking for consent to transfer the files and stating that consent may be presumed if the client does not respond within a period of not less than 90 days. No file moves before consent or day 90, whichever comes first; records not sold are returned; files of clients who cannot be reached are retained confidentially; and the acquiring member must be satisfied that the consents were obtained. Verbal consent does not count. A seller who becomes an equity owner of the successor firm is outside the rule; one who stays on as an employee or consultant is not.

California

California made the rule mandatory for every licensee, member or not. Board of Accountancy regulation 16 CCR §54.3, in force since 1 April 2024, requires written notice to each affected client by first-class or certified mail, or by e-mail to an address the client authorized in writing, containing a request for consent and the statement that consent is presumed after 90 days without objection. Records of clients who object are returned without delay; records of clients who cannot be reached are not transferred and are kept for at least four years; the notice and each consent or objection are retained for at least four years after the sale. A California broker’s practice sheet draws the consequence: the closing date may need to sit 90 days after the notices, and some purchase agreements tie part of the price to consenting clients. Brokers report 50–65% of clients respond to the first request.

Florida, Michigan, Delaware

None of the three has a sale-specific board rule that we could find. Florida’s statute makes working papers the CPA’s property (§473.318) and its rule 61H1-23.002 requires client records to be furnished to the client on request; Michigan’s Occupational Code keeps client information confidential without written permission; Delaware’s rules were not retrievable in full. For AICPA members in these states, 1.400.205 is the operative standard; for non-member preparers, the federal rule below and the engagement letter govern.

Tax return information: Treasury Regulation §301.7216-2(n)

Federal law restricts what a tax return preparer may do with return information, and the regulation carves out the sale of the business. A preparer may keep a list of clients (names, addresses, e-mail, phone, entity type, return form number) and may transfer it only in conjunction with the sale or other disposition of the tax return preparation business. Due diligence before a proposed sale counts as being in conjunction with the sale, and is not a transfer, if it is done under a written agreement that requires confidentiality and prohibits any use other than evaluating the purchase. The acquirer inherits the same limits, and paragraph (m) extends the rule to retained returns and records. In practice the seller can open the books to a qualified buyer under NDA without asking each client, and the buyer can use the list to offer tax preparation and nothing else; see the IRS §7216 information center.

Staff, lease, and the non-compete

Buyers of practices under $2 million usually want all of the staff, and brokers treat key staff without non-competes as a negative because a departing employee can take clients. Confirm pay, benefits, and any employment agreements in the purchase agreement, and tell staff late and together. Most buyers keep the location for at least the first year; the lease must be assignable, and long or expensive leases are on every list of value reducers. The seller’s non-compete sets a distance and a term and bars solicitation of former clients; no broker publishes standard years or miles, so it is negotiated with the price. For tax purposes the covenant is a separate asset of the sale (below).

Taxes on the proceeds

The IRS treats the sale of a business as the sale of each of its assets, with the gain or loss on each determined separately; capital assets produce capital gain, depreciable property held over a year falls under section 1231, and inventory produces ordinary income. Buyer and seller must both use the residual method to allocate the price and both file Form 8594 with their returns, and the allocations must match. The form’s classes matter to a practice seller in two places: goodwill and going-concern value are Class VII, and a covenant not to compete entered into with the acquisition is a Class VI section 197 intangible, which the buyer amortizes over fifteen years. Practitioner guidance treats the seller’s receipts for the covenant as ordinary income and receipts for goodwill as capital gain, which is why sellers push allocation toward goodwill and buyers toward the covenant and fixed assets; the IRS pages state the classification, not the seller-side characterization, so confirm it with your own advisor. Where part of the price is paid after the year of sale, Publication 537 allows the installment method, reporting gain as payments arrive on Form 6252. Entity form changes the answer: an asset sale by a C corporation can be taxed at the corporate level and again on distribution, while a partnership interest is generally a capital asset except for unrealized receivables.

Selling to an employee, a partner, or by merger

An internal transfer skips the marketing but rarely matches an external price: the Journal of Accountancy’s 2014 analysis found external sales usually produce higher prices than internal ownership transfers, and the buyer’s financing is the same SBA loan with the same 10% injection. A merger into a larger firm with a buy-out over time is the structure larger practices use; it is priced on earnings with a two-to-three-year retention agreement, and it is the route through which private-equity platforms acquire firms (see who is buying). A practice continuation agreement, which names a firm to take over if the owner dies or is disabled, is the fallback every sole practitioner should have whichever route they plan.