A2X Newsletter | When is the right time to sell your accounting practice?

Accounting and bookkeeping firm owners all confront the same fork in the road: Should you scale, merge, or sell your practice?

Few can describe that crossroads better than Alastair Barlow – the co-founder of flinder, a finance-as-a-service practice he grew from an idea in 2017, to 40 staff and £2.5 million in revenue, before selling it minutes ahead of the 2023 UK Autumn Budget.

Today Alastair advises practice owners who are weighing their own exit options. If selling has ever crossed your mind, this newsletter is for you.

Over to you, Alastair!

Thanks, Elspeth. I speak with UK accounting and bookkeeping firm owners every day about their next move and would be happy to chat about yours – connect with me on LinkedIn or subscribe to The Naked Accountant, where I share real stories on building flinder along with some views on the wider industry.

There are two questions that almost always come up when I’m chatting with practice owners who are weighing their future options:

1. Should I sell my practice?
2. When is the right time to sell?

The answers to these questions will look different for everyone.

That said, here are some considerations that might help you make sense of your own situation.

1. Should I sell my practice?

First, decide what “selling” will mean for you. If you’ve never gone through a sale process before, there are a lot of unknowns.

Having explored 20 or so potential acquirers through our sales process, we had the opportunity to consider a variety of different sale structures.

They’re not a one-size-fits-all, and it helps to begin your selling journey with a clear idea of the outcome you want – something first-time sellers without an advisor may not always recognise. Beyond the more traditional “succession” path, where new partners buy in and established partners step back, there are also alternative structures that can better align with different goals.

Here’s a list of common options:

Sell and exit

In this scenario, you may sell to a consolidator that may or may not be PE-backed. Typically, you will exit the business after a short handover period and you will likely have an upfront payment with a proportion of the deal deferred (which may or may not be earn-out related). Depending on where the consolidator is in their project, you may also be able (or have) to roll-up some of your equity in the TopCo.

Sell and remain

This is largely similar to the sell and exit scenario, but you will remain in a key position within the aggregated business, either in a new role, or running your business as a business unit. Your previous partner drawings will be converted into a salary and you may be awarded share options, depending on the ownership structure (typically more PE-backed). You may retain some equity in your existing business – this could be anywhere between 49% and less. Some acquirers take a more passive approach and allow you to continue to run your business, but take “high” management charges.

Sell to team

In this situation, ownership transfers internally through a management buy-out (MBO) or employee ownership trust (EOT). The deal is typically funded through a combination of bank debt and future profits of the firm, with your equity purchased gradually over time. This often provides cultural continuity, preserves the firm’s legacy, and rewards the next generation. However, liquidity for you as the seller may be slower compared to an external sale, and deal size is usually lower than a trade sale to a consolidator. There are currently tax advantages for pursuing an EOT.

Step back

Here, you remove yourself from day-to-day operations by appointing an MD or CEO to run the firm, while you remain a shareholder. Your role shifts more to governance, strategy, or advisory - extracting value via dividends rather than a capital event. This option works best if the firm is consistently profitable and doesn’t require your constant involvement. While it won’t give you an immediate lump sum payout, it can be a highly effective way to retain long-term income and keep equity upside.

Personally, I think it’s important to be clear on the path you want because it needs to work for you as a partner/owner. If you compromise on your exit strategy at this stage, the deal just won’t sit right, and eventually it will unravel at some point.

And remember: selling is just one fork. You could double-down and scale, merge with a peer, or grow first and sell later. After careful consideration, we chose to “sell and exit” at flinder for various reasons. One of those reasons was because I was looking for a new challenge; you might decide differently.

2. Is there a “good time” to sell my accounting practice?

One of the most common reasons accounting leaders give for not being ready to sell is their belief that they can grow the business further and achieve a higher valuation in the future.

In my experience, it takes a lot to grow a business significantly – there are certain levels of growth where making a step change requires a disproportionate amount of effort.

So, the big question is: should you chase a bigger valuation, or bank today’s?

There are exceptions, but generally, my bias is selling sooner often beats later for a number of reasons:

**The “bigger later” mirage
**It’s tempting to hold out for a larger payday, but each extra year means fighting churn, hiring, and reinvesting just to maintain momentum. The work-to-reward ratio eventually flattens out, and the incremental upside may not justify the hard work, stress, and sleepless nights.

**Looming AI disruption
**Valuations today are still pegged to people-heavy delivery models. But AI-first entrants, or your own adoption of AI, could reshape margins and compress multiples quickly. What looks attractive now might not be on offer in a few years.

**Real liquidity right now
**Private equity has flooded the accounting space, but deal windows don’t stay open forever - markets shift, capital tightens, and appetite cools. Today’s valuations aren’t guaranteed tomorrow.

**Opportunity cost of a capital exit
**Selling can create personal liquidity in terms of a capital event, but it can also unlock time and energy you can redirect into new ventures or personal priorities. Delaying a sale means deferring the chance to compound value elsewhere.

Following my views about “selling sooner”, another question I’m often asked is: What are current multiples in the market?

Well, that’s a hard question to answer without knowing more about the business, but if you’re > £1M in annual revenue, you will be looking at an EBITDA multiple, and if your revenue is < £1M, you will most likely be looking at a revenue multiple.

Factors that influence multiples are varied, but will generally include:

• Growth rate
• Churn rate
• Average client tenure
• Cloud maturity
• Contribution (gross) margin
• Staff turnover
• Process maturity
• Service catalogue
• Revenue expansion
• Sectors
• Tech stack
• Among many more!

Preparing for a (quick) sale

It is possible to sell in a relatively quick time frame – we managed to do this with flinder.

The process was deliberately fast-tracked, and ultimately took just over 7 weeks from heads of terms to completion. Our view was that we had made our decision and we wanted to move forward, execute on the strategy, and maintain momentum (while avoiding “deal fatigue”).

Here’s an overview of our timeline:

Week 0 – Heads of terms signed (4 Sep)
Week 1-2 – Financial, tax, and commercial due diligence – data room live
Week 3 – Confidential culture sessions with managers
Week 4 – Working capital mechanism + minority rollover agreed
Week 5 – 100-page Sale and Purchase Agreement (SPA) reaches near-final draft
Week 6 – Daily live red-line calls until 23:30
Week 7 – Completion (29 Oct 23:58) – funds transferred

You can read more about the details of flinder’s sale in my newsletter, but there were two levers that made speed possible:

1. A meaningful deadline – The date of our sale, 29 October, was no accident – we intentionally wanted to complete the sale before the government’s Autumn Budget (for capital gains tax reasons). While this seemed unrealistic at times, it helped us stay focused and kept everyone on track. We managed this process with a proper project management methodology to make sure everything happened.

2. Due diligence readiness from the beginning – We had a complete data room ready within two weeks, which simplified diligence. We had already built a lot of the brand in the years leading up to this; in our case, brand covered our people, what we delivered to our clients, and the way in which we did them.

And of course, we had huge alignment between us as the sellers and the great team at Ascendant, who were our acquirers.

Some tips to move quickly with your data room:

• Document every core process now
• Keep monthly management accounts clean, consistent, and up to date
• Store contracts, policies, and licences in one place so they’re easy to share
• Use cloud apps that scale; avoid bespoke spreadsheets no one else can read

I’ve put together a checklist of diligence items requested here.

Next steps

If you’re weighing an exit, or want to chat about next steps for your practice, I’d love to chat. Reach out to me on LinkedIn, and don’t forget to sign up for The Naked Accountant – my newsletter sharing real stories on building an outsourced finance function firm along with some views on the wider industry.

– Alastair