What is Your Practice Worth in the 2013 M&A Market?
Tax Season 2013 is over and the M&A frenzy will pick back up again where it left off. So, what is your practice worth? What can you expect whether you are a buyer or seller? One thing is for sure – Baby Boomers are selling at a rate that the profession has never seen before. It is still a sellers market, for now. But the demographics and the thousands of practices that will soon be for sale suggest that may change over the next few years.
We are often asked by our clients about the market and what firms are selling for. Everyone wants to know “what’s the multiple?” But, it’s not just about the multiple; it’s about the overall deal structure and terms. The multiple is only one piece of the puzzle. The important components that go together to make up and influence the structure are:
Size of practice
Profitability of the practice
Term (number of years) of the payments
Length of time before the purchase price is fixed
Extent and quality of client transition
And finally, the multiple of revenue being paid
For more information and a discussion of the deal components outlined above click here.