Glossary of practice sale terms
These are plain-English definitions of the terms that come up when valuing, selling or running a practice, from GRF to BADR.
These are plain-English definitions of the terms that come up when valuing, selling or running a practice, from GRF to BADR.
The predictable, repeating annual fee income from work clients need every year (accounts, tax, VAT, payroll, bookkeeping). GRF is the usual starting point for valuing a practice.
The share of total fees that repeats each year. A higher recurring percentage means more predictable income and a higher value per pound of fees.
The multiple of gross recurring fees a practice sells for — commonly around 0.8–1.2× for UK general practice, higher for high-quality books.
Earnings before interest, tax, depreciation and amortisation, times a multiple — more common in larger, private-equity-style deals (often ~4–7×).
The extent to which a firm's relationships, pricing and knowledge sit with the owner. High owner-dependency reduces what a buyer will pay.
How much of your fees sit with your largest clients (often measured as the top-10 share). High concentration is a risk buyers discount.
(WIP + debtors) ÷ annual fees × 365 — the number of days' fees tied up between doing the work and being paid. Lower is better.
Work done but not yet billed. High WIP can indicate under-billing, scope creep or delivery problems.
Fees billed as a percentage of the value of work done. Consistently below ~90% on compliance usually means under-pricing or over-servicing.
Part of a fixed sale price paid later, usually in instalments over one to three years. The amount is certain; only the timing is deferred.
Part of the price that's contingent on performance after completion — usually client retention. The amount depends on what happens next.
A term sheet setting out the agreed shape of a deal — price, structure, timeline, involvement — before the formal sale agreement. Mostly non-binding, but some clauses (confidentiality, exclusivity) usually bind.
The buyer's review of the practice — fees, concentration, staffing, WIP, compliance — to confirm it's what it appears to be.
Selling the trade and assets (goodwill, WIP, client relationships) out of a company, while the seller keeps the company itself. Buyers often prefer this; it can trigger 'double extraction' tax for sellers.
A relief that can reduce the Capital Gains Tax rate on qualifying business disposals, up to a lifetime limit. Eligibility isn't automatic; rate and limit have changed in recent years.
Transfer of a going concern — a way a business sale can be treated for VAT so that VAT isn't charged on the deal, if conditions are met.
Authorised Corporate Service Provider — a firm registered (and AML-supervised) to file at Companies House on clients' behalf under the identity-verification regime.
Making Tax Digital for Income Tax — digital records and quarterly updates for qualifying sole traders and landlords, mandatory from 6 April 2026 for those over £50,000.
Two exit shapes: leaving quickly (clean break) or handing over gradually while staying involved (phased step-down). A phased handover often supports a stronger overall figure.
A confidential call with us covers what your practice is worth and the options open to you, whether or not you decide to sell.
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Andy Jackson, co-founder