Established CPA Firm, 40-Year New Mexico Tax & Advisory Practice

$1.8M

Revenue

$788K

SDE

3.4x

Multiple

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Full Editorial Writeup

This is a 40-year-old CPA firm in New Mexico delivering tax, accounting, bookkeeping, audit, and advisory services to small and mid-sized business clients across multiple industries. The practice runs on a loyal, referral-driven client base with a seasoned professional team, generating roughly $1.79M in revenue and $788k in owner cash flow at a 44% margin. That margin profile is strong for a services firm and reflects a well-established book with sticky, repeat relationships.

The firm positions itself as regionally entrenched with meaningful concentration in specialized business sectors, which creates both a defensible niche and a recognizable brand in its market. Notably, ownership says they are turning away work and taking on only select clients due to capacity constraints, which signals demand exceeds current delivery capacity. For a buyer with staffing infrastructure, that stored demand is a real growth lever rather than a hopeful projection.

Management is explicitly seeking a strategic buyer, not an individual operator, and is open to staying on post-close and folding into a larger platform. The listing is SBA lender prequalified with as little as 10% down, though the seller's stated preference is a strategic acquirer rather than a solo buyer, which shapes who this deal is actually for.

Why we like it

Earnings quality is excellent for a service firm: $788k cash flow on $1.79M revenue is a 44% margin, and a 40-year operating history with referral-driven clients suggests the earnings are durable rather than a one-year spike. Tax and accounting fees are among the stickiest revenue in small business because clients rarely switch preparers who know their history.
The moat is switching costs and trust. Clients hand a CPA their full financial picture and returns year after year, and referral-based acquisition means the firm is not renting demand from paid ads. Forty years of reputation in a regional market is genuinely hard to replicate.
Accounting is about as recession-resistant as services get. Businesses must file taxes and keep books regardless of the economy, and audit and advisory work often increases when money gets tight. Revenue here recurs by default through annual filing cycles and ongoing bookkeeping engagements.
There is embedded, unforced growth. Ownership admits they are turning away clients due to capacity constraints, so a buyer who adds staff or offshore capacity can convert existing demand into revenue without spending a dollar on marketing. That is the cleanest kind of upside to underwrite.

How to improve it

Attack the capacity constraint first. Map the pipeline of turned-away or waitlisted clients and staff up (local hires or offshore preparers) to capture demand the firm is already declining. This is revenue sitting on the table that requires labor, not sales effort.
Raise prices on the existing book. A 40-year firm with loyal referral clients is almost always underpricing, and a 5-10% fee increase at renewal on sticky clients drops nearly straight to the bottom line. Test it on a segment first, then roll it forward.
Expand advisory and CFO-style recurring services. Convert transactional tax clients into monthly advisory or outsourced accounting retainers to smooth revenue and lift per-client value. This shifts the mix from seasonal filing spikes toward year-round recurring cash flow.
De-risk the owner dependency during the stated transition period. Use the seller's willingness to stay on to systematize client relationships, document workflows, and transfer signing authority and key contacts to remaining staff. The goal is a firm that runs without the founder within 12 to 24 months.
Analyze and diversify sector concentration. The firm serves a significant number of clients in specialized sectors, so quantify that concentration and pursue adjacent verticals to reduce reliance on any single industry. This protects earnings if one specialized sector hits a downturn.
Invest in modern workflow and tax software to lift throughput per professional. Automating document intake, e-signatures, and prep review lets the existing team handle more clients without proportional headcount growth. Higher utilization directly expands the already strong margin.
Build a light structured referral engine. The firm already grows by referral, so formalize it with partner relationships (banks, attorneys, business brokers) and a simple client referral incentive. Turning an accidental channel into an intentional one accelerates organic growth.

Diligence notes

Verify revenue recurrence and client retention. Pull a client roster with annual billings, tenure, and churn to confirm how much revenue is genuinely recurring versus one-time engagements. Ask what percentage of clients have been with the firm 5-plus years.
Quantify client and sector concentration. Confirm the top 10 clients' share of revenue and identify the specialized sectors mentioned, since heavy concentration in one industry or a few clients is the biggest risk to a services book. Understand what happens to earnings if the largest accounts leave.
Assess the professional team and licensing. Determine how many CPAs and staff are employed, who holds the licenses that engagements depend on, and whether key personnel will stay post-close. A CPA firm's value walks out the door if the credentialed team leaves with the seller.
Normalize the $788k cash flow. Scrutinize owner add-backs, personal expenses, and any below-market compensation for staff or the owner, and confirm what a replacement managing partner or additional labor to capture growth would actually cost. The real question is EBITDA after paying for the labor needed to run and expand it.
Confirm the SBA prequalification and financing structure. Understand what the seller's preference for a strategic buyer means for a leveraged acquisition, and validate the lender prequalification terms directly. Reconcile the 10% down SBA path against the seller's stated desire to join a larger operation.

Source

Originally listed on BusinessBroker.net. View original listing →