- Below roughly $1M in revenue, most practices are priced off a multiple of gross revenue, not EBITDA, because EBITDA isn't meaningful at that scale.
- Solo-owner practices under $500K typically sell for 0.9x to 1.2x revenue; practices between $500K and $3M sell for 1.0x to 1.4x.
- Above roughly $3M, the valuation method itself changes to EBITDA multiples: 4-5x for tax-season-concentrated firms, 5-6x for balanced firms, 6-7x for recurring-heavy firms with strong partner retention.
- The same revenue number can produce a materially different price depending on recurring-revenue mix, client concentration, and how dependent the practice is on the owner personally.
Ask a broker what an accounting practice is worth and the honest answer is a range, not a number: something times revenue, or something times EBITDA. Sellers hear that and assume it’s the same “something,” just applied to a different line of the P&L. It isn’t. Past a certain size, the entire method changes, and a practice that would have been priced one way at $900K in revenue gets priced a completely different way once it crosses into the millions.
The size where that happens is lower than most owners expect.
Why EBITDA doesn’t work for a $700K practice
EBITDA multiples assume there’s a meaningful, stable earnings number to multiply. For a solo or two-partner practice under roughly $1M in revenue, there usually isn’t one. Owner compensation, discretionary expenses, and the sheer noise of a small P&L make EBITDA swing too much year to year to price off of reliably. So the market doesn’t try. Practices at that scale get priced off gross revenue instead, most often recurring revenue specifically, since that’s the part a buyer can actually count on.
The bands are narrower than a lot of sellers hope. A solo-owner practice under $500K in revenue tends to trade at 0.9x to 1.2x that revenue. Move up to the $500K-to-$3M range and it climbs modestly, to roughly 1.0x-1.4x. A practice generating $600K in revenue at a 1.0x multiple sells for close to what it bills in a year. That number often disappoints an owner who was mentally pricing the practice off a professional-services multiple they read about somewhere else.
Where the method flips
Somewhere north of $3M in revenue, there’s enough of a real P&L to support an EBITDA multiple, and the market shifts to one. This isn’t a gradual blend between the two approaches. It’s a different question entirely: instead of “how many times your top line,” a buyer is now asking “how many times your actual, sustainable profit.”
Even within EBITDA multiples, the range splits by what kind of practice it is. A firm concentrated around tax season, with revenue that spikes hard in Q1 and goes quiet the rest of the year, tends to land at 4-5x. A firm with a more balanced mix of compliance and advisory work sits at 5-6x. A firm built on recurring engagements, with partners who’ve shown they’ll stay through a transition, can reach 6-7x. The spread between the bottom and top of that range, on a firm doing $5M in EBITDA, is the difference between a $20M sale and a $35M one. Same revenue. Same industry. Different practice.
What actually separates the top and bottom of a range
None of this comes down to the size of the firm alone. Three things move a practice up or down within its band, and they show up in every valuation report for a reason.
Recurring revenue is the first. A practice built on monthly bookkeeping, quarterly compliance work, and recurring tax preparation for the same client base is worth more per dollar of revenue than one that leans on one-off engagements a buyer can’t count on repeating. It’s the accounting-practice version of the same logic that shows up across every recurring-services business: predictable cash flow gets priced higher than the same cash flow earned unpredictably.
Client concentration is the second, and it’s the one owners tend to underestimate. A practice where the top five clients account for half of revenue carries real risk that a top client walks the moment ownership changes hands, and buyers price that risk in directly, not as a footnote.
Owner dependency is the third. If clients call the owner personally, expect the owner in every meeting, and would notice immediately if a different name was on the engagement letter, that’s a practice that’s hard to hand off cleanly. A firm where clients are used to working with a team, not one person, retains value through a transition in a way a one-owner-does-everything practice usually doesn’t.
What this means for pricing a specific practice
A $2M practice with 70% recurring revenue, no client over 8% of billings, and a team clients already know isn’t the same asset as a $2M practice built around one partner’s personal book of business, even though both would get quoted the same 1.0x-1.4x range on a first pass. The first is closer to the top of its band. The second is closer to the bottom, if it clears the bar at all without the seller staying on for a transition period.
That’s the number worth getting from a broker before assuming a round figure applies: not just the revenue-times-multiple math, but which end of the range a specific practice actually sits in, and why.