Recast Episode: This episode was originally published on April 19, 2018, but it’s a favorite among our Growing Your Firm Podcast community, so we’re bringing it back. Have you been listening to the podcast since the original airing of this episode? Share this post on your favorite social channel to let us know!

Brannon Poe, Founder of Poe Group Advisors and Accounting Practice Academy and author of Accountant’s Flight Plan, revealed how to sell your accounting firm for 7-figures. He also touched on what to look for when buying a firm if you’re looking to level up. Most of Brannon’s clients are in the latter group as firms seek to accelerate their growth.



  • How to sell your accounting firm for 7-figures
  • Two core pieces to make your firm attractive to buyers
  • What an acquisition looks like from a cash receipt perspective
  • The #1 critical mistake when acquiring a new firm

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How to Sell Your Accounting Firm for 7-Figures

Brannon Poe, the founder of Poe Group Advisors, is a CPA and started out in the firm brokering business in 2003. Today, with his company, he helps clients with buying, selling and growing their firms. Most of his clients are in Canada or in the Eastern United States. If you hop over to his site, you’ll get some real eye candy for the types of firms that are selling and what they receive at close. 

Recently, Brannon started a coaching workshop called Accounting Practice Academy to help firm owners navigate CPA firm growth. Many of his clients are making revenue of up to $5 million. While that might not sound massive, accounting firms tend to sell for a 1X multiple. If you make $5 million per year, assuming you own close at 100%, you could potentially leave the table with a $5 million dollar check. That’s where Brannon’s 15+ years of expertise come in. 

By following what he shares today, you’re setting yourself up for a big payday. If you’re interested in how to sell your accounting firm, pay attention. Right now, Brannon sees a massive trend coming where baby boomers are beginning their final sprint to retirement. He expects many firms to go on the market for selling in the coming few years. With his brokerage company, he looks for high-quality firms. Those are the easiest to sell and the process goes much, much smoother. Let’s define this.

What Makes an Accounting Firm a Good Candidate for Selling?

Before you sell, you must understand why someone buys. Perhaps you’re on this side of the table right now. Today, acquiring a firm could be the fastest way to get a leg up. Maybe you’re struggling with growth; maybe you’re breaking into a new city or even country. Going from $1 million to $4 million in one year is a tough stretch for anyone. 

But, when you acquire a firm and make that same jump, you have resources at your disposal to help with the leap. A key thing to look for is a high-quality firm. Brannon describes such a firm with two characteristics:

  1. Owner hours are as low as they can be.
  2. Cashflow to the owner is as high as it can be.

Let’s dissect each characteristic.

Owner Hours Should Be as Low as Possible

Owner hours = how much time the owner is in the business running it

To be frank, a good owner should be taking a lot of vacation. One of Brannon’s top-selling firms has an owner taking 6 weeks of vacation — sometimes all at once. 

Cashflow Should Be as High as Possible

The second piece is cash flow to the owner. This is pretty self-explanatory, but it means more money than not is making its way to a firm owner’s pocket. Not hard to see why. 

You open a firm to make more money while pursuing what you’re good at. Does it make sense to see little return on that risk and effort? Of course not. According to Brannon, if you’re under $1 million in revenue, your owner should see over 50% of cash hit their pocket. Over $1 million, that number should come down naturally, but not too much. 40% is a good number. 

One of Brannon’s previous clients was a $2.5 million dollar firm. They had just 6-7 people. The owner took home $1 million dollars each year. They had great pricing, and their clients resided in the $5 million – $50 million. Their multiple to sell was actually above 1X and that $1 million dollar take-home was probably the cause. 

Let’s break down how to become an enticing firm to buy. If you’re not there yet, it’s okay.

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After brokering for 15+ years, Brannon identifies three core ideas to becoming a high-quality firm:

  1. You must be good at pricing.
  2. You must be great at selecting the right clients.
  3. You must have an all-Star team.

You Must Be Good at Pricing

The first bit about pricing has been repeated on our show, but it goes to say how important pricing is. You must charge enough and beyond to account for your expertise, not just the hours you spent chained to your desk.

You Must Be Great at Selecting the Right Clients

Next, you must select the right clients. Brannon’s example showed a firm only working with 8-figure clients for the most part. Do you think these rich clients were bantering about price? Probably not.

You Must Have an All-Star Team

Finally, you must have a rock-solid team. If you’re going to take a few weeks off throughout the year, you need to have peace of mind that your team will take care of everything while you’re out. 

Now that you know what to do and how to sell your accounting firm for 7-figures, let’s look at what a transaction might look like.

The Actual Business Dealings of a Firm Acquisition and Selling

Here’s an approximate breakdown of how his business dealings go:

  • 50% of Brannon’s businesses get cash at close. This means the selling firm walks away with the fully agreed-on amount, and the cord is cut. 
  • 40% of deals are seller-financed with some stipulations on earnings. 
  • 10% of Brannon’s deals center on earn-out provisions. This means the seller gets paid based on receivables from the seller’s former clients. 

Earn-Out Deals: Issues to Watch Out For

Here’s the #1 critical mistake buying firms make during this process: They try to get the best earn-out provision deal possible

Brannon doesn’t like earn-out deals because there are too many negatives to watch. When a seller’s payout is contingent on the buyer’s future performance, there will be some controlling issues. Sellers will start staying on, trying to do things their way to make sure they see their payouts increase. Soon control issues, like management problems, appear. Then, your new clients will turn to their security blanket, your seller, thus causing confusion and resentment. 

Lastly, earn-out provisions eat into your cash flow. While you’re trying to grow a bigger business, money is finding its way out of your account and into your seller’s pocket. It’s part of the deal, but it’s crippling. Acquiring is a serious step to take in a business. You want to make sure all of your ducks are in a row. This is what you can expect after an acquisition.

What to Think About Before Making an Acquisition

A major worry when you acquire is, “What if all of the clients I just bought leave me?” It’s a valid concern. What would you be buying in the end, anyway? 

In Brannon’s experience, he sees 2-4% turnover as fairly common. You probably see that in your current business. Brannon recommends handling the transition with as much care as you put into the work you do for your clients (be it tax, compliance, consulting, etc.). Clients don’t want to go through the hassle of finding new CPAs. It’s up to you as the new owner to make them feel comfortable.

Market the Revamped Business Without Spending a Dollar

Brannon offers coaching to help buyers with the transition. He also helps advise in marketing and growing the revamped firm without spending a dollar. If new buyers or existing practice owners want further perspective in growing their business, they can participate in the Accounting Practice Academy that Poe Group offers. 

Here’s the secret: Selling firms tend to lay off the gas with internal opportunities. They’re ready to cash in, so they don’t put in the extra grunt work. When you make the acquisition, you could find estate planning needs, advisory, opportunities to increase prices, and more. You should have these in mind before you sign on the dotted line.

What’s Your Goal?

Another point to consider is your goal for the acquisition. Buying a firm should not simply be a way to improve your current firm. Every firm you acquire will become more of what you already are now. It’s not a magic pill to prosperity. In one instance, Brannon’s client had a 60% cashflow-to-owner get sold to an owner with a 40% cashflow-to-owner. Fast-forward 5 years, and the new owner hasn’t seen 60% back to himself. He was seeing 40%.

Pro Tip: Any business you acquire will only become more of what you are now. Nothing will change unless you change your mindset and your processes.

Consider the Cost of Acquisition Per Customer

If you’re making a big play to increase your client size, make sure you factor in the marketing costs. What’s the cost for acquisition of one client in your current firm? Compare this to one customer in the firm you’re looking to acquire. If the former number is lower, then you might be better off spending your money on marketing your current business, not spending the time and money on M&A. These are just a few of the conversations you’ll need to have right away when you’re ready. 
Let us know on Social: What was it like to buy and/or sell your accounting firm? What other tips should we include?

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