In brief
- You can sell the whole practice, as an asset or a share sale, or sell a block of fees, and the choice affects tax, liabilities, staff and what the buyer’s lender will ask for.
- Accountancy practices and fee blocks are usually priced by reference to recurring fees, adjusted for quality and retention risk, and much of the price is often linked to the clients who actually stay.
- Client information is confidential, so take advice before sharing it with prospective buyers. ICAEW publishes a helpsheet on buying and selling fees that covers the ethical and confidentiality issues.
- Employees usually transfer to the buyer on their existing terms under TUPE, and the buyer’s firm must be supervised for anti-money laundering purposes.
- Most buyers borrow. A buyer whose finance is lined up early is less likely to hold up completion, and the deferred element you agree affects how much the buyer must fund on day one.
How accountancy practice sales work
Selling an accountancy practice usually means choosing between three routes: selling the whole practice, selling a block of fees while you keep the rest, or selling to people already in the practice, such as a senior manager or a partner. Many owners sell through a specialist practice broker or agent, who values the practice, finds buyers and manages offers. Others approach a firm they already know.
A whole-practice sale is either an asset sale, where the buyer acquires the goodwill and other assets, or a share sale, where the buyer acquires the company that owns the practice. A fee block sale transfers client relationships without the business itself. The structure affects tax, liabilities, staff and the buyer’s funding, so agree it early with your solicitor and accountant.
A typical sale runs in this order:
- Prepare the practice and take advice on its value and the best route.
- Find a buyer, often after confidentiality agreements are signed.
- Agree heads of terms covering the price, how it is calculated, any deferred or retention-based element and your role after completion.
- The buyer carries out due diligence and applies for finance.
- Agree the sale agreement, the client communication plan and the staff transfer.
- Complete, introduce clients to the buyer and hand over.
How an accountancy practice is valued
Accountancy practice valuation usually starts from the recurring fees and the profit they produce. There is no fixed market multiple, and any figure quoted without seeing the practice should be treated with caution. Buyers and their lenders look at:
- Recurring fees: annual accounts, tax, payroll and bookkeeping work is valued more highly than one-off projects.
- Client concentration: income spread across many clients carries less risk than a book dominated by a few.
- Fee levels and collection: whether fees are in line with the work, and how promptly clients pay.
- Your role: how much the client relationships depend on you personally, and how long you will stay to hand them over.
- The team and systems: staff who know the clients, and software and processes the buyer can take on.
Because clients choose whether to stay, many sales link part of the price to the fees actually retained over an agreed period, through retention-based pricing, clawback or deferred consideration. Our fee block finance guide explains how these mechanisms work from the buyer’s side.
Clients, confidentiality and data protection
Client information is confidential, and a buyer will want to see enough of it to judge the practice. ICAEW publishes a helpsheet on buying and selling fees that covers identifying opportunities, ethical considerations and client confidentiality, and a wider hub on buying or selling a practice. If you belong to another professional body, check its guidance too.
Client records also contain personal data, so the transfer has to comply with data protection law. GOV.UK’s guidance on data protection in your business is a starting point, and your solicitor will advise on how and when client information can be shared and transferred. Plan how clients will be told about the sale, because a well-handled introduction supports retention, and retention drives the price.
Anti-money laundering supervision
Accountancy firms are covered by the money laundering regulations and must be supervised. GOV.UK’s guidance on who needs to register for money laundering supervision explains that HMRC supervises accountancy service providers that are not supervised by a professional body, and lists professional bodies, such as ICAEW and ACCA, that act as supervisory authorities. A buyer taking on your clients will need its own supervision in place and will carry out its own client due diligence, which is part of the integration work after completion.
Staff and TUPE
When a business or part of it changes owner, GOV.UK’s guidance on business transfers, takeovers and TUPE explains that employees may be protected: their terms and conditions transfer to the new owner and their continuity of employment is maintained. Whether TUPE applies to a fee block sale depends on the facts, so take advice. For the buyer and their lender, staff who know the clients matter because they support retention.
Tax on the sale
Selling a practice usually means Capital Gains Tax on any gain. Business Asset Disposal Relief may reduce the tax you pay when you sell all or part of a business. GOV.UK sets out the conditions: for a sole trader or business partner, broadly that you have owned the business for at least two years up to the date of sale, and for shares, that you have been an employee or office holder of a trading company for at least two years. The timing of deferred payments can also affect your tax, so take advice before you agree the structure.
How buyer finance affects the sale
Most buyers borrow to buy an accountancy practice or a block of fees, so the buyer’s lender is part of your sale. The lender will want a schedule of the fees being acquired, the draft sale agreement, the retention and deferred terms, and the buyer’s own accounts, and it will set conditions that must be met before it releases funds.
A buyer whose finance is lined up early is less likely to hold up completion. When you compare offers, ask how each buyer intends to fund the purchase and how far they have got. The highest price is worth less if the buyer cannot fund it, and a sensible deferred element can make a deal easier for a buyer to finance, although it also means you carry some risk after the sale.
You can help by having the information lenders need ready and pointing buyers, including staff or partners buying from you, to finance early. We arrange fee block finance and practice acquisition finance across the whole of the market.
Preparing your accountancy practice for sale
Buyers and their lenders ask for much the same information, so preparing it before you go to market saves time later:
- Fees: several years of fees by client and by service, showing which recur.
- Accounts: the practice’s accounts and current figures, with any owner-specific costs explained.
- Debtors and WIP: the current position and how it will be dealt with at completion.
- Engagement letters: up to date for each client.
- People: staff contracts and who is expected to stay.
- Systems: the software and processes the practice uses, and any contracts the buyer would take on.
- Premises: the lease and its remaining term, if the buyer will take over the office.
Selling to staff or a partner
Selling to a senior manager or partner who already works in the practice can make the handover smoother, because clients and staff already know them. They may buy the whole practice or a share first, with the rest later. See partner buy-in finance, succession finance and our guide to partner retirement and succession funding.
How we can help
We do not sell practices, but we arrange the finance that lets buyers buy them. We search the market across the whole of the market, with access to 300+ lenders including specialist professions lenders, high-street and challenger banks, and present each case to the lenders most likely to suit it. Finance is subject to status, lender criteria and approval.
If you are selling, point your buyer to accountancy practice loans or instant quotes. If you are buying, see our fee block finance guide.
Common questions
How do I sell my accountancy practice?
Decide whether to sell the whole practice, a block of fees or to people already in the practice, take advice on value and structure, then find a buyer, often through a specialist practice broker or a firm you know. After heads of terms, the buyer carries out due diligence and arranges finance, and the sale completes with a planned introduction of clients and transfer of staff.
How is an accountancy practice valued?
Usually by reference to recurring fees and the profit they produce, adjusted for client concentration, fee levels, how much depends on you personally and the team. Many sales link part of the price to the fees actually retained after completion. There is no fixed market multiple.
What is the difference between selling a fee block and selling the practice?
A fee block sale transfers client relationships and their fees without the business itself, while a practice sale transfers the business, as an asset sale or a share sale, usually with staff and premises. The structure affects tax, liabilities, staff and the buyer’s funding.
Can I share client details with prospective buyers?
Client information is confidential and includes personal data, so take advice before sharing it. ICAEW’s helpsheet on buying and selling fees covers the ethical and confidentiality issues, and buyers are usually asked to sign a confidentiality agreement first.
What happens to my staff when I sell my accountancy practice?
Under TUPE, employees usually transfer to the buyer with their existing terms and conditions and continuity of employment. Whether TUPE applies to a fee block sale depends on the facts, so take advice.
Can I help my buyer get finance?
Yes. Having fee schedules, accounts and the draft sale terms ready speeds up the lender’s assessment, and you can point buyers to finance early. We search the market for lenders that fund accountancy practice and fee block purchases. See fee block finance.
Official sources
This guide is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.
