Selling an accounting or tax firm

Accounting work repeats every year and clients tend to stay, which appeals to investors. But many firms distribute nearly all their income each year⁴, so large bets on technology, acquisitions or retirement payouts are hard to fund internally.

In a 2025 Accounting Today survey, almost two-thirds of firms said they needed no outside capital, yet half of those with 100 or more employees had taken private equity. Technology was the top use of new capital, and 29 percent of respondents cited succession⁵.

Talent adds pressure. The Bureau of Labor Statistics expects about 115,300 openings a year for accountants and auditors through 2035⁶, while the AICPA's 2025 Trends report counted 55,152 accounting graduates in 2023-24, down 6.6 percent, though enrollment has since begun to rise⁷.

Deals reach firms of every size. Ascend, backed by Alpine Investors, added Miami's KSDT in September 2025² and Alabama's Jackson Thornton in May 2026⁸. At the small end, Rallyday Partners portfolio company Insero Advisors bought 12-person DeMott & Smith CPAs in November 2025⁹.

Platform or add-on matters. A sponsor starting fresh wants leaders who can run a growing group without the founders. A platform adding your firm mostly asks whether clients and staff will stay.

Your main options:

• A larger CPA firm: you merge into another partnership as a partner or on its retirement terms. Audit work stays under one roof, but more of your value may arrive over time.
• A private equity backed platform: you join a group supplying capital, technology and back-office support, usually through the attest split below. Expect cash plus equity.
• A sponsor investing directly: this usually takes a larger firm. H.I.G. Capital agreed in August 2026 to become HBK's first institutional investor, with its partners still leading the firm¹⁰.
• A practice buyer: an individual CPA or small firm buys your client base, often with bank financing and a seller note¹¹. This suits sole practitioners and small partnerships.
• Wealth managers and outsourced accounting platforms: Soltis Investment Advisors added GDM Private Financial Solutions in April 2026³, and Numera, backed by Astira Capital Partners, bought KBS CFO in October 2026¹².

An AICPA resolution requires CPAs to hold a majority of the financial interests and voting rights in a firm that performs audits, reviews or similar attest work, or presents itself as a CPA firm. Non-CPA owners must be actively engaged, and ownership by passive investors is prohibited¹³.

State law sets its own limits. Florida requires CPAs to hold at least 51 percent¹⁴, Ohio requires licensed owners to hold a majority and control the firm¹⁵, and Georgia's rule bars non-CPA owners who are mainly passive investors¹⁶. Those are the only states checked for this guide, so confirm yours with your state board or an attorney.

The answer is the alternative practice structure, which the AICPA code has addressed since 2000¹. The firm splits in two. A CPA-owned attest firm keeps audits and reviews and stays financially responsible for them. A separate company, which investors can own, handles tax and advisory work and supplies staff, offices and equipment to the attest firm in return for most of its revenue¹³. Meaden & Moore adopted this structure when Unity Partners invested in July 2026¹⁷.

If you do no attest work and do not present yourself as a CPA firm, the resolution may not reach you¹³, though state rules still apply.

Independence is the live issue. If a buyer performed prohibited non-attest work for one of your audit clients during the period the report covers, its independence is impaired and safeguards cannot cure it¹³.

Those rules are being rewritten. On November 3, 2026, the AICPA's ethics committee approved a second exposure draft with a 120-day comment period. If approved in 2027, it would take effect a year after adoption. It would count a controlling investor among the firm's network firms, which brings independence requirements, and bar the attest firm from attest work for businesses over which that investor has significant influence¹. NASBA, the state boards' association, had urged a 5 percent bright line for investor influence¹⁸. These are proposals and may change.

Before signing a letter of intent, ask any investor-backed buyer:

• Which of its investors' portfolio companies are audit or review clients of your firm?
• Who will own the attest firm and carry its liability after closing?
• What changes if the final rules differ from the draft, and who bears the cost?

Buyers start with how much revenue returns without being resold. Annual tax and audit work repeats, but monthly advisory fees are usually prized most. In a 2024 CPA.com and AICPA survey of more than 200 firms, client advisory practices reported median growth of 17 percent, helped by fixed fees billed on a recurring basis¹⁹.

Profit counts as much as revenue. A 2015 Journal of Accountancy article argued that pricing a practice on billings alone ignores wide differences in profitability¹¹. A wealth arm helps too: Ascend singled out Jackson Thornton's $2 billion wealth business⁸.

Have these ready for buyers:

• Revenue by line: tax, audit, client accounting, advisory and wealth for three years, with recurring fees shown separately.
• Client retention: a yearly count of fees kept and lost, and why clients left.
• Pricing: average fee by client type, realization and collection speed.
• Earnings: profit after paying each partner a market salary.
• Partner books: who holds which relationships, and each partner's age and retirement plans.
• Bench: staff by level, license and turnover, and who could take over a book.
• Tax season capacity: hours by month, overtime and extension rates.
• Quality: your latest peer review, since attest firms must enroll in an approved monitoring program¹³.

Unfunded partner retirement promises set this industry apart. Most firms pay retiring partners out of what younger partners earn afterward, and one column put a full handoff at up to 10 years⁴. A CPA Practice Advisor columnist wrote in 2025 that he is surprised how many firms have unrealistic, unfunded plans²⁰, and 18 percent of respondents in the Accounting Today survey cited funding retirement obligations as a reason for outside capital⁵.

A buyer will likely treat those promises as debt unless you show who carries them. Retired partners may also have rights of their own: in a poll reported by Accounting Today in 2025, 14 percent of firms had a clawback letting retirees share in the gain if the firm sells during their buyout²¹. Know what is owed and who must approve a sale before you meet anyone.

Other problems buyers raise:

• Owner dependence: you hold the key relationships and review the complex returns, so a buyer fears clients will leave with you.
• Staffing gaps: no successor CPAs, high turnover or a bench of retirees and seasonal help.
• Tax season strain: overtime is normal in this work⁶, but if returns only get out because the founder prepares them, a buyer sees no spare capacity.
• Concentration: one client, family or industry carrying too much revenue. For attest clients, the AICPA code also treats heavy fee dependence as an independence threat¹³.
• Weak data security: firms that complete income tax returns count as financial institutions under the FTC's Safeguards Rule²², which calls for a written security program, encryption and multifactor authentication²³.

Confidentiality starts before there is a deal. The AICPA code expects precautions such as a written confidentiality agreement when a buyer reviews your practice¹³. Tax regulations are more specific: due diligence on your taxpayer list avoids counting as a transfer if it runs under a written agreement that requires confidentiality and bars any use beyond the purchase²⁴. Sign one before client data changes hands.

Moving files takes time. If you sell and keep no ownership, the code tells you to ask each client in writing for consent to transfer its files, and to say consent may be presumed after at least 90 days without a response, unless the law or your state board forbids it¹³. Your state may be stricter, so check.

Engagement letters need attention. In an attest split, audit and tax work sit in different entities, so clients may need new letters. Offshore work adds a step: KSDT's India team joined Ascend's offshore group². A taxpayer must consent before return information goes to a preparer outside the United States²⁵. Clients that do not file Form 1040 can do that in an engagement letter²⁵, while Form 1040 filers need a separate written consent²⁶, and special limits apply to their Social Security numbers²⁵.

Clients can leave, so explain why you chose this buyer. A 2016 Journal of Accountancy article advised minimizing changes for the first couple of years²⁷.

Two offers with the same headline number can pay very differently. Add up what arrives at closing, what depends on clients staying and what rests on someone else's equity.

Retention drives most small deals, since part of the price often follows fees collected after closing. The 2015 Journal of Accountancy article warned that a small down payment with a large contingency leaves a buyer little at stake, and it favored more cash with a modest seller note¹¹. Define which clients count, over what period and who decides to drop a client.

Private equity deals add equity. The partners of Farkouh, Furman & Faccio reinvested when Prosperity Partners bought the firm in December 2025²⁸. Platforms also change hands: Unity Partners invested in Prosperity in 2023, and Lightyear Capital announced a majority investment in July 2026²⁹. Ask how your shares are valued and when you can sell.

Your role will change. In the AICPA's example, owners of the old firm become employees of the investor-owned company while CPAs own the attest firm¹³. Firms that distribute all their profit often need a compensation scrape, which lowers partner pay to create the earnings a buyer values⁴. Model your income year by year.

Ask what stays local. Ascend said Jackson Thornton keeps its name and leadership⁸, and Murphy, Miller & Baglieri kept its local brand with Current³⁰.

A typical offer has these parts:

• Cash at closing, after debt and working capital adjustments. Agree how unbilled time and receivables count, since tax season swings both.
• Rollover equity: a partnership interest received for contributed property generally triggers no gain at that moment³¹. Ask your own tax adviser.
• Retirement obligations: who pays retired partners after closing, and whether the balance reduces your price.
• Covenants and liability: client non-solicitation, tail coverage and who bears claims on work signed before closing.
• Timing: a midseason handover is hard on clients and staff. Bowman & Company's deal with PKF O'Connor Davies took effect January 1, 2026³².

Firms that sell well start long before a buyer calls. These steps help even if you stay independent:

• List what you owe: every retired partner payment, deferred compensation promise and capital account, with a funding plan.
• Update your partnership agreement: sale approval, how proceeds split and retiree rights.
• Hand off relationships: pair a younger partner or manager with each top client for a full tax season.
• Grow recurring fees: move bookkeeping and advisory clients to monthly fixed fees, and reprice the low-fee tail.
• Develop your bench: help staff earn the license, including the new route of a bachelor's degree plus two years of experience where your state allows it³³.
• Refresh engagement letters, covering outside service providers and data use.
• Map attest work: list audit and review clients, fees and other services, so conflicts can be tested fast.
• Clean up the books: accrual statements, aged receivables and partner pay at market levels.