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Core Metrics Impacting CPA Firm Values - The Visionary Group

Written by Doug Lewis | Mar 29, 2023 5:00:00 AM

Are You Looking At The Right Metrics!

The M&A activity in the accounting profession continues to increase and strategies continue to adapt. More practices than ever are hitting the market due to a lack of session plans and increased competition as firms consolidate at a faster pace.

What Is Your Value?

With all of this activity taking place, firms are asking what their value is and what they should pay for a firm. Some practices are getting lower than anticipated offers, while others are seeing offers higher than they expected. There are multiple factors that impact this value gap. Each merger partner or acquirer has their own approach and different valuation methodology, but two common metrics of high importance are:

  • Revenue Per Professional Head
    • We use $200K as a minimum target.
  • Revenue Per Equity Partner
    • Most target $1.5M to $2.5M.

Test Your Value

Our team can walk you through critical metrics and how to equalize profits when calculating your firm’s metrics. We can also provide key concepts to consider when evaluating your firm’s performance and measuring your value in this changing marketplace.