Central Valley CPA Practice, 16-Year Stanislaus County California Firm

$1.5M

Revenue

$762K

SDE

2.5x

Multiple

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Full Editorial Writeup

This is a CPA practice founded in 2010 in Stanislaus County, in California's Central Valley, running a diversified book of tax, accounting, payroll, and advisory work. The revenue base is well spread: roughly 707 individual returns at an average fee of $775, about 250 business returns at an average fee of $1,648, 136 other returns at $1,154, plus around $250,442 in annual accounting-client revenue across roughly 30 accounting clients. Smaller lines round it out including compilations (~$25k), consulting (~$17k), and payroll processing (~$48k).

On $1.494M of gross revenue the practice throws off $762k of cash flow, a fat ~51% owner-earnings margin that is typical of a well-run tax shop with mostly billable-hour and fixed-fee work. The tech stack is standard-issue for a firm this size: Lacerte for tax prep, CCH Practice Management, QuickBooks, and Tax Tools. The seller prefers a CPA buyer or a firm employing a CPA because the practice provides compilation services.

At a $1.9M ask, this prices at roughly 2.49x cash flow and 1.27x revenue, which sits in the normal band for accounting practices where retention risk drives the discount off SDE. The lease runs through September 30, 2028, and 2026 cash flow is projected at $761,577. This is a boring, sticky, recession-durable cash machine, the kind of business that renews itself every tax season.

Why we like it

Earnings quality is excellent for the category, with $762k of cash flow on $1.494M of revenue, a ~51% margin that reflects fixed-fee tax work rather than thin project billing. The revenue is granular and diversified across roughly 1,093 returns plus 30 accounting clients, so no single client dictates the P&L. That kind of atomized book is far more defensible than a firm carried by a handful of large accounts.
Accounting and tax is about as recurring and durable as small business gets, because returns must be filed every year and bookkeeping/payroll are monthly obligations regardless of the economy. Roughly $250k of annual accounting revenue plus $48k payroll and monthly compliance work forms a sticky base that renews by default. Switching accountants is a hassle most clients avoid, which underpins retention.
Tax and compliance demand is genuinely recession-proof, since the IRS and California FTB do not pause during downturns and business owners still need returns, payroll, and advisory. This is essential, non-discretionary spend, which protects both revenue and pricing power through cycles. The Central Valley client base of individuals and small businesses is stable and unlikely to disappear.
The multiple is reasonable at 2.49x cash flow, and an incoming CPA or a nearby firm can fold this book onto existing infrastructure to expand margins immediately. Average fees are healthy ($775 individual, $1,648 business), leaving room to raise prices on a base that has likely been under-billed by an owner nearing exit. For a strategic acquirer, the synergy math is compelling.

How to improve it

Push a systematic fee increase across the individual and business return base in the first filing season, given average fees of $775 and $1,648 that are likely below current market. Even a 10-to-15% lift on 957 core returns drops almost entirely to the bottom line with minimal client attrition if communicated well.
Expand the advisory and payroll lines, which today are only ~$17k consulting and ~$48k payroll against $1.49M total. These are higher-margin, stickier services; cross-selling existing tax clients into monthly bookkeeping, CFO advisory, and payroll deepens retention and raises revenue per client.
Convert seasonal tax clients into year-round engagements to smooth the revenue curve and improve staff utilization outside the January-to-April crush. Offering fixed-fee annual packages that bundle tax, quarterly check-ins, and planning turns one-time filers into recurring accounts.
Systematize and document the workflow before the owner departs, since the seller is a hands-on CPA and continuity risk is the main threat to value. Building standard operating procedures on Lacerte and CCH and onboarding a licensed senior preparer protects the compilation services that require CPA oversight.
Renegotiate or plan around the lease that expires September 30, 2028, and evaluate whether a smaller footprint or hybrid/remote model can cut occupancy cost. Modern tax practices run leaner on physical space, and freeing that overhead adds directly to cash flow.
Invest in a light client-retention and referral engine, because organic growth in accounting is driven almost entirely by word of mouth. A simple referral incentive and proactive annual outreach can grow the book without meaningful marketing spend.

Diligence notes

Verify client retention and concentration by pulling a multi-year client roster with billings, since the entire valuation hinges on how many of the 707 individual and 250 business returns actually renew post-sale. Confirm the 30 accounting clients producing $250k are on ongoing engagements rather than one-offs, and identify any single client above 5% of revenue.
Scrutinize the $761,577 projected 2026 cash flow against actual historical results, because a projection is not a track record. Request three years of tax returns and P&Ls to confirm the ~51% margin is real and recurring, and to normalize for owner compensation, personal expenses, and any add-backs baked into SDE.
Assess owner dependence and transition risk directly, since the seller is a working CPA and clients may follow the individual rather than the firm. Determine the seller's post-close support commitment, non-compete terms, and whether existing staff include a licensed CPA capable of signing compilations, which the seller flags as a buyer requirement.
Confirm the lease terms and renewal options given the September 30, 2028 expiration, and model occupancy cost under a renewal or relocation scenario. Also verify software licensing and any transferability constraints on Lacerte, CCH Practice Management, and QuickBooks.
Check for regulatory and quality-control exposure by reviewing peer review status, malpractice/E&O history, and any open IRS or FTB matters tied to client engagements. Compilation and tax work carry liability, so confirm clean standing and adequate professional insurance can transfer.

Source

Originally listed on BizBuySell. View original listing →