The jargon, explained

Plain-English definitions of the terms that come up when valuing, selling or running an accountancy practice. Bookmark it — and see our in-depth guides for the full picture.

Gross recurring fees (GRF)

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.

Recurring percentage

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.

Fee multiple

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.

EBITDA multiple

Earnings before interest, tax, depreciation and amortisation, times a multiple — more common in larger, private-equity-style deals (often ~4–7×).

Owner-dependency

The extent to which a firm's relationships, pricing and knowledge sit with the owner. High owner-dependency is the single biggest drag on value.

Client concentration

How much of your fees sit with your largest clients (often measured as the top-10 share). High concentration is a risk buyers discount.

Lockup

(WIP + debtors) ÷ annual fees × 365 — the number of days' fees tied up between doing the work and being paid. Lower is better.

WIP (work in progress)

Work done but not yet billed. High WIP can indicate under-billing, scope creep or delivery problems.

Recovery rate

Fees billed as a percentage of the value of work done. Consistently below ~90% on compliance usually means under-pricing or over-servicing.

Deferred consideration

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.

Earn-out

Part of the price that's contingent on performance after completion — usually client retention. The amount depends on what happens next.

Heads of terms

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.

Due diligence

The buyer's review of the practice — fees, concentration, staffing, WIP, compliance — to confirm it's what it appears to be.

Asset sale

Selling the trade and assets (goodwill, WIP, client relationships) out of a company, rather than the company itself. Buyers often prefer this; it can trigger 'double extraction' tax for sellers.

Share sale

Selling the shares in the company that runs the practice. Usually more tax-efficient for the seller (a single CGT charge on the shares).

Business Asset Disposal Relief (BADR)

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.

TOGC

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.

ACSP

Authorised Corporate Service Provider — a firm registered (and AML-supervised) to file at Companies House on clients' behalf under the identity-verification regime.

MTD for Income Tax

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.

Clean break vs phased step-down

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.