In Canopy’s webinar Inside an Accounting Firm Deal, Bob and Doug Lewis (Visionary Group) broke down what’s actually happening in CPA firm private equity transactions, including how firms get valued, how deal terms are structured, and where sellers and buyers tend to misread risk.
Check out the real questions and answers firm owners asked during the webinar.
A: Most deals use a blend of cash at close, earnouts, and rollover equity. All-cash deals still happen for smaller firms, but they’re less common. Pure earnout structures are also rare.
A: Earnouts are common in most deals. Clawbacks exist in documentation but are rarely triggered in practice. The bigger issue is usually how earnout targets are defined, measured, and enforced.
A: The risk is tied to equity quality. Not all acquirers offer comparable equity. Sellers should evaluate the platform’s track record, leadership, capitalization strategy, and realistic path to a future liquidity event rather than relying on optimistic appreciation projections.
A: It’s still early for many firms. Second liquidity events have happened in a limited number of cases, mostly at larger platform levels. Broader proof in the middle market is still developing.
A: Pricing typically starts with net adjusted EBITDA, then applies a multiple. To get to adjusted EBITDA, buyers normalize partner compensation and apply add-backs. The multiple reflects risk, scale, and buyer demand.
A: Add-backs can materially change value because they’re multiplied by the EBITDA multiple. If an expense won’t continue post-close, it may increase adjusted EBITDA and therefore enterprise value.
A: The webinar cited roughly 30% gross EBITDA (before equity partner compensation) as a strong benchmark. Firms under ~20% can signal operational distress that may reduce value or constrain buyer appetite.
A: Generally, yes. Multiples tend to rise with firm size, assuming profitability and leadership depth hold. Geography, niche, and growth opportunity can still move the number in either direction.
A: Yes, there have been rollups over the past decade that didn’t produce strong exit outcomes. That’s one reason the speakers emphasized evaluating equity quality and operating fundamentals, not just headline terms.
A: Once a seller gives up control (especially in a majority sale), the next liquidity event is largely determined by the platform. Buyer “plans” can change, so sellers should discuss future capitalization and exit expectations early.
A: Yes. The speakers emphasized that culture and operating alignment often matter more than small differences in valuation. Many buyers can get close on price. Integration success is harder to fix after the fact.
A: Valuations can be surprisingly close. Differences show up in structure and control, including governance, integration expectations, and the quality and mechanics of rollover equity. When price is comparable, fit and alignment often decide the deal.
A: Concentration impacts both risk and buyer appetite. Firms with a defined niche (service or industry) can be easier to underwrite than generalist practices. Buyers also look closely at revenue dependency on a small number of clients.
A: It depends on scale and fragmentation. The webinar flagged downside when firms have many small, sub-scale locations that add overhead complexity. Geography can also create upside when a firm provides meaningful scale in a market buyers want.
A: One practical approach is to normalize offshore labor into an onshore full-time-equivalent cost basis to evaluate productivity consistently.
A: Indirectly. Buyers price profitability. Technology matters when it improves margins, reporting, scalability, and operational consistency. Simply adopting tools doesn’t automatically raise value.
A: Often, yes—if other factors are comparable. Streamlined workflows can reduce integration risk, but valuation still depends on leadership depth, client mix, niches, and service lines.
A: Buyers assess the client base for cross-sell potential and underserved needs. A firm can look more valuable if a platform can introduce additional services without major incremental cost.
A: Many platforms invest first in infrastructure (tech, staffing, systems), then shift more capital toward acquisitions once integration capacity is built.
A: Smaller firms may use brokers and listings. Many mid-market deals are sourced privately through networks and advisors, and a large number of transactions never become public.
A: Buyers range from large consolidators to strategic firms to independent buyers using SBA financing. Competition is intense, so buyers need clarity on what profile they can win and how they differentiate.
A: It’s being discussed, especially around audit-related considerations, but additional oversight has been limited so far.
Most accounting firm transactions are never publicized. And when they are, the details that matter most, structure, earnouts, rolled equity, profitability adjustments, aren’t shared.
That means “average multiples” you see online rarely reflect the full reality.
Takeaway: Your firm’s value depends less on market chatter and more on your specific performance, risk profile, and growth story.
Five years ago, outside capital in accounting was rare. Today, a significant portion of larger firms have either:
Private equity accounting firm deals have shifted the market, impacting firms at every size. Even if you plan to remain independent, buyer expectations around profitability, pricing, automation, and scale are rising.
Succession remains the most common driver, but it’s no longer the only one.
Common seller motivations:
At the same time, younger partners are sometimes choosing to join larger platforms to accelerate growth and expand services overnight.
The surge in accounting practice mergers & acquisitions is not random. Private equity accounting firm deals are driven by clear economic fundamentals and long-term growth opportunities.
Valuation starts with math, but it doesn’t end there.
This includes:
Small adjustments can significantly impact price once the multiple is applied.
Multiples vary based on:
Smaller firms often see lower EBITDA multiples than larger, more scalable firms, but there is no universal “standard” number.
Structure matters. Two firms with the same valuation can walk away with very different outcomes depending on:
Understanding structure is just as important as understanding valuation.
If you’re thinking about positioning your firm for a future liquidity event, focus on what consistently drives value:
Interestingly, some buyers prefer firms with clear upside opportunities, such as underdeveloped advisory or pricing improvements, if the fundamentals are solid.
Private equity sees accounting firms as:
In many cases, buyers aren’t paying for what your firm is today. They’re paying for what it could become with capital, systems, and scale.
The Q&A portion of this webinar tackles the real-world concerns firm owners are asking about: earnouts, rolled equity risk, geography premiums, niche practices, wealth attachments, and more.
If you’re exploring a sale, recapitalization, or strategic partnership, see the questions real firm owners had and learn what to apply directly to your firm.
Watch the on-demand webinar to hear the full discussion and deal examples, then explore how Canopy helps firms modernize workflows and reporting to operate with clearer, deal-ready visibility.