Why an accounting firm valuation takes more work than a generic small business report
An accounting firm valuation in Australia typically takes more work than a simple small-business valuation because it requires reconciling two different methods, not just applying one. Every accounting firm owner has heard the rule of thumb: fees are typically worth somewhere around 80 cents to $1.20 per dollar of recurring billings, adjusted for the mix of work. It is genuinely useful industry shorthand for a quick partner-to-partner conversation about an internal buy-in. It is not a market valuation, and it is not something the ATO, a family law court, or an incoming partner's bank will accept on its own for a CGT event, a partnership restructure, or a Division 7A loan test. A defensible report has to do something the rule of thumb does not: reconcile the cents-in-the-dollar convention against an earnings-based methodology and explain where and why they diverge. That reconciliation is the scope difference between a partner-lunch estimate and a report that holds up under review.
What makes an accounting firm valuation more involved
A small suburban accounting practice, one or two principals, a handful of staff, mostly compliance-driven revenue, is typically the simpler engagement because the analysis is contained. The work grows from there once any of the following apply: a multi-partner structure with separate equity classes or staged buy-in arrangements; a meaningful mix of one-off advisory or fixed-fee project revenue sitting alongside the recurring compliance base, which requires separate normalisation; and a history of bolt-on acquisitions (client-book purchases from retiring sole practitioners), which adds separate intangible-asset tracing and integration analysis to the file. A single-principal practice with clean, mostly-compliance billings is a comparatively contained engagement. A multi-partner firm with a bolt-on history and a growing advisory arm is a materially larger scope of work. That means more analysis and more time to get the information complete, not a higher fee: the fee is set by annual turnover.
Oliver Group's fixed fees for an accounting firm valuation
Oliver Group's fees are set by the annual turnover of the business: a Small Business Valuation is $1,495 + GST for turnover under $2 million, a Medium Business Valuation is $2,495 + GST for turnover between $2 million and $10 million, and a Large Business Valuation is $3,495 + GST for turnover over $10 million. For small-business reports a draft is delivered in 2 business days and for medium-business reports in 3 business days; the delivery date for a Large Business Valuation is agreed before commencement. Delivery time starts once payment and all required information have been received. Retrospective valuation dates are +$495 each and additional entities are +$795 each. The fee is fixed in writing before work begins and never depends on the concluded value.
Annual turnover under $2 million. Draft delivered in 2 business days.
Annual turnover $2 million to $10 million. Draft delivered in 3 business days.
Annual turnover over $10 million. Delivery date agreed before commencement.
The method-reconciliation driver
Cents-in-the-dollar is a revenue multiple dressed up as industry wisdom. It says nothing about profitability, staff cost structure, partner remuneration levels, or the quality of the earnings behind the billings. Maintainable earnings, normalised EBITDA or adjusted partner earnings, capitalised at an appropriate multiple, measures what the practice actually generates once realistic principal salaries are added back. A defensible report tests both. Where the two converge, that is useful corroboration. Where they diverge, for example, a firm with strong recurring fees but thin margins because of high staff-to-partner ratios, or a firm with rich fee-per-client but declining volumes, the divergence itself is part of the analysis, and the report has to explain which methodology, or what blend, the evidence best supports. This reconciliation step is scope a generic retail or trades business simply does not need, because there is no competing rule-of-thumb convention to test against.
The WIP and lockup driver
Work-in-progress, unbilled disbursements and debtor lockup days materially affect what an accounting practice is actually worth at a given balance date, and they are frequently the item most loosely tracked in the firm's own management accounts. A practice showing strong headline fee revenue can be worth meaningfully less once WIP is fairly stated (not overstated to flatter year-end numbers, not understated because time hasn't been billed out yet) and once lockup days are factored into working capital normalisation. For a CGT event, a partner buy-in, or a Division 7A-adjacent restructure, the valuation date matters: WIP and debtors as at that specific date need to be analysed, not assumed from the most recent financial year-end. This is one of the more technical adjustments in a professional-practice valuation and a common point of dispute between outgoing and incoming principals.
Client-book transferability: the real driver of goodwill
Not all fee revenue transfers the same way. Recurring compliance work, annual tax returns, BAS lodgements, SMSF administration, tends to sit with the firm rather than the individual partner, and transfers relatively cleanly to a purchaser or incoming principal. Advisory relationships, particularly where a specific partner has built a personal relationship with a handful of larger clients over many years, are a different asset class entirely. That fee base can walk out the door with the partner regardless of what the engagement letter says. A defensible valuation grades the fee base by stickiness: separating firm goodwill (transferable, institutional, attaches to the practice) from personal goodwill (attaches to an individual and is not readily transferable). Getting this split wrong is one of the most common reasons a professional-practice valuation gets challenged, whether by the ATO, a departing partner, or a family law court. See our companion piece on personal versus transferable goodwill for how this distinction is tested in practice.
The honest trade-off with a fixed fee
A fixed fee means you know the cost before work starts. What it does not do is shorten the work a more involved practice needs: the delivery time starts only once payment and all required information have been received, and a multi-partner firm with a bolt-on history will usually take longer to get that information complete than a single-principal practice. The only extras are the two add-ons agreed at engagement, a retrospective valuation date and an additional entity. One limit applies at every package: the fixed fee does not cover a cross-check of the conclusion against a second or third methodology, expert witness work or tax advice.
What this means for your practice
If you are a sole practitioner with mostly compliance billings and a clean set of accounts, a contained engagement is realistic. If you are one of several partners, carry a growing advisory book alongside compliance work, or have bought client lists from retiring practitioners over the years, expect the engagement to test more than the cents-in-the-dollar shorthand: because a report built only on that convention is exactly the kind of thin analysis that does not survive a partner dispute or an ATO query. Either way the fee is set by the annual turnover of the practice, not by how involved the analysis is. This article is general information only, not tax or legal advice: speak to your accountant or lawyer about how CGT, Division 7A or a partnership restructure applies to your specific circumstances.