How should a small accountancy practice be valued for sale. Turnover is in the range 60K to 100K with around 200 clients. Is 2 x turnover realistic?
Kevin French
Replies (3)
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Possibly to high
Kevin
In my experience, the maximum I have seen is 1.3 GRF (Gross retained Fees = existing recurring clients fees and not one off ah-hoc work).
The payment is usually spread over 18 months to 2 years, in 2 to 3 instalments with the final instalment being based on the level fees retained after the transition period.
In order to assess to the level of GRF, I would advise that you have a good look at the client base e.g. if there is a good level of Ltd companies, you may want to offer say 1.3GRF, if there are small sole trader clients with who do not settle their fees on time, you may want to offer .80GRF. The net effect of your investigation may warrant a consolidated GRF of 1.1.
I hope this is understandable and helps.
GRF
The turnover per client based on the figures supplied is £300 to £500, which suggests that the clients either small traders or price conscious customers. This should be raised at the bargaining negotiations to reduce the multiple in my opinion to below 1.
I agree with the last replies - probably .75 to 1 x GRF unless your very lucky.
Why not try advertising the practice on here?