Contents
- Your working
- How this calculator works
- What this calculator cannot see
- Questions
Your working
The table lists every figure the calculator used and every adjustment it made, and it updates as you change an input.
| Factor | Your figure | Effect on multiple |
|---|
The changes that would raise the value most
Based on your inputs, these are the changes that would move the number most. Each row recalculates the whole valuation with that one factor at its strongest setting, and shows the difference in the mid-point.
| If you improved… | To | Mid-point moves by |
|---|
Send me this result
We'll email your figures to you with a written note on what would move the multiple for your firm. If you ask, we will also give you our own indicative range as a buyer, and we will sign an NDA if you want one.
How this calculator works
UK accountancy practices below the mid-tier are usually bought and sold on a multiple of gross recurring fees. Profit is a poor guide, because the reported profit of an owner-managed firm depends on how the owner chooses to pay themselves (salary, dividends, pension, the car, the spouse on the payroll), so two identical practices can show completely different profit figures. Recurring fees measure what a buyer is acquiring: clients who pay predictably, every year, for work they are required to have done.
The arithmetic has two parts. First, establish the recurring fee base. Second, decide what multiple that fee base deserves. The calculator does the second part by starting from a multiple you set, then applying stated adjustments for the five things that determine how safely and completely that income transfers to a new owner.
Step 1 — the recurring fee base
Count only fees that repeat. Annual accounts and corporation tax, ongoing personal tax returns, bookkeeping, VAT and payroll retainers and company secretarial work are recurring. A one-off R&D claim, a single restructuring job, a probate matter or ad-hoc consultancy that will not repeat is not recurring, however profitable it was. If you overstate this figure, a buyer will remove anything that does not repeat and redo the sums, and the price will fall.
Step 2 — the starting multiple
The box defaults to 1.00×, the same starting point as our main valuation page. That is Practice Group's own working assumption for a general UK practice with no obvious strengths or weaknesses. It is not a market statistic, and you can change it. If a broker or another buyer has quoted you a different number, or you know what a comparable local firm changed hands for, type that in instead. The adjustments are applied to whatever you enter.
Step 3 — the adjustments
Each factor moves the multiple by a stated amount. These weights are Practice Group's assumptions about how transferable fee income is, expressed in points of multiple. They are shown in full so you can disagree with any of them and adjust your starting multiple to compensate.
| Factor | Band | Adjustment |
|---|
| Owner hours a week on fee-earning work | 0–10 | +0.12 |
| 11–20 | +0.06 |
| 21–30 | 0.00 |
| 31–45 | −0.08 |
| 46+ | −0.15 |
| Fee-earning staff (FTE, excluding you) | None | −0.10 |
| 1–2 | −0.03 |
| 3–5 | +0.03 |
| 6 or more | +0.06 |
| Advisory share of fees | 0–5% | −0.05 |
| 6–15% | 0.00 |
| 16–30% | +0.05 |
| Over 30% | +0.08 |
| Top-10 client concentration | 20% or less | +0.08 |
| 21–35% | +0.03 |
| 36–50% | −0.04 |
| 51–65% | −0.10 |
| Over 65% | −0.18 |
| Average client tenure | Under 3 years | −0.08 |
| 3–5 years | 0.00 |
| 6–9 years | +0.05 |
| 10 years or more | +0.09 |
| Owner-dependency score (used instead of hours and staff if you enter one) | 80–100 | +0.15 |
| 60–79 | +0.07 |
| 40–59 | 0.00 |
| 20–39 | −0.10 |
| 0–19 | −0.20 |
The adjusted multiple is then held inside a floor of 0.40× and a ceiling of 1.60×, because beyond those points the formula no longer reflects real sales. The range you see is the adjusted multiple plus or minus 0.10×, which reflects how much the price can move between a good deal structure and a poor one on otherwise identical figures.
Worked example
A firm with £300,000 of recurring fees, 10% advisory, 40% top-10 concentration, an owner doing 25 hours a week of production work, 3 fee-earning staff and 6-year average tenure, starting from 1.00×:
| Starting multiple | 1.00× |
| Owner hours (25 → 21–30 band) | 0.00 |
| Staff (3 → 3–5 band) | +0.03 |
| Advisory (10% → 6–15% band) | 0.00 |
| Concentration (40% → 36–50% band) | −0.04 |
| Tenure (6 years → 6–9 band) | +0.05 |
| Adjusted multiple | 1.04× |
| Range applied (±0.10) | 0.94× – 1.14× |
| Indicative value | £282,000 – £342,000 |
If the same firm's owner does 50 hours a week of production work and there are no staff, the multiple falls to 1.00 − 0.15 − 0.10 + 0.00 − 0.04 + 0.05 = 0.76×, and the range becomes £198,000 to £258,000. The fees are identical, and the mid-point is roughly £84,000 lower because the firm depends on one person.
What this calculator cannot see
A calculator with six inputs gives a starting point and leaves several things out. It does not know your lock-up and debtors — a firm carrying nine months of unbilled work in progress is worth less than the fee figure suggests. It does not know whether your fees are adequately priced; under-charged clients mean the buyer inherits a re-pricing job and the client losses that come with it. It does not know your retention history, only your average tenure, and the two are not the same thing. It knows nothing about your systems and software, your lease, your professional indemnity history, or whether your team will stay.
It also cannot see deal structure, which often matters more than the headline price. Two offers at the same number are worth very different amounts depending on how much is cash on completion, how much is deferred over one to three years, and how much is contingent on clients staying. A lower price paid mostly in cash can be worth more than a higher one that is two-thirds at risk.
