Many SMSF audit practitioners are unsure what their firm might realistically sell for. To provide transparency, this article summarises what reputable industry sources say about the valuation of accounting and SMSF audit firms in Australia.
We also explain our firm's acquisition criteria -- and why we are willing to pay up to 2x annual revenue, which is materially above standard market multiples.
All key industry sources are linked so readers can verify the information themselves.
Valuation methods depend heavily on the size of the firm. Smaller firms are usually valued on revenue multiples, while larger firms shift to earnings-based methods.
Below is a fair and accurate summary drawn from leading publications.
Source: https://www.thedeal.au/articles/whats-your-accounting-firm-worth
TheDeal.au notes:
Smaller firms (under ~$1.2m revenue):
> "For those firms it's a simple dollar-for-dollar calculation - the business's annual revenue is generally its value, or at least the starting point as the market in recent years has seen smaller firms trading at $1.10 to $1.20."
Larger firms ($1.2m-$1.5m+ revenue):
> "When a business moves north of the $1.2 million to $1.5 million level of revenue, the price calculation moves to a multiple of EBITDA."
Summary:
Source: https://toaglobal.com/au/blog/value-cpa-firm/
TOA Global explains that valuation methods vary significantly depending on the annual fee level:
Conclusion: Most SMSF audit-only practices are valued primarily on revenue multiples, not EBITDA.
Source: https://www.accountingtimes.com.au/profession/asking-price-what-s-your-accounting-business-worth
> "Once earnings surpass $1.2 million to $1.5 million, the firm's valuation is based on EBITDA."
CPA Australia reports:
Most SMSF audit-only practices in Australia:
Therefore, 1.0x-1.2x revenue is the most relevant benchmark.
Despite most SMSF audit firms selling for 1.0x-1.2x revenue, we are prepared to pay:
Up to 2x annual audit revenue OR $600 per fund
Example 1 -- You charge $300 + GST per audit We will pay $600 per fund (2x revenue)
Example 2 -- You charge $400 + GST per audit We will pay $600 per fund (~1.5x revenue)
We are seeking established online SMSF audit firms with:
Industry sources consistently show:
Against this backdrop, our offer of:
Up to 2x annual revenue or $600 per fund
is among the strongest in the Australian SMSF audit market.
If your business:
--we would welcome a confidential discussion.
We offer: