Westwood CPA Practice, 37-Year Westside Los Angeles Tax & Accounting Firm

$1.2M

Revenue

$800K

SDE

1.9x

Multiple

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Full Editorial Writeup

This is a sole practitioner CPA practice established in 1988 and based in Westwood on the affluent Westside of Los Angeles near UCLA. The firm generates roughly $1.2M in annual revenue, with tax services driving over $1M of that and a smaller bookkeeping and accounting book contributing another $200k. The client base is high-net-worth individuals and small businesses spanning Beverly Hills to Santa Monica, built over four decades on referrals and long-standing relationships.

The service mix is roughly 150 individual returns, 250 LLC and partnership returns, and 100 corporate and other returns, supported by a lean operation of two full-time employees. The practice runs on a modern tech stack: Lacerte for tax prep, QuickBooks for accounting, JetPack for practice management, and SmartVault for a client portal where most clients upload documents digitally, meaning minimal foot traffic and an efficient workflow out of a 1,000 square foot Class A office on Wilshire Blvd.

What makes this notable is the margin and the moat. At $800k of cash flow on $1.2M of revenue, this is a 67% margin business with a sticky, affluent, referral-driven clientele in one of the most desirable submarkets in the country. The owner is retiring after 40 years and is offering seller financing, a first-year gross revenue guarantee, and up to two years of transition support, which is an unusually strong package for a practice this size.

Why we like it

Earnings quality is exceptional for a practice this size, with $800k of cash flow on $1.2M of revenue, a 67% margin that reflects both pricing power and a lean two-person cost structure. The 1.88x cash flow multiple is well below typical CPA practice pricing, and the seller is guaranteeing year-one gross revenue, which materially de-risks the earnings claim.
The moat is decades of accumulated goodwill and a high-net-worth client base spanning Beverly Hills to Santa Monica, sustained by consistent referrals rather than paid acquisition. Switching costs for tax and accounting clients are high because the incumbent holds the financial history and relationships, creating meaningful barriers for newer competitors.
Tax and accounting is one of the most recession-resistant services there is, since returns must be filed and compliance work continues regardless of the economy. The affluent Westside clientele adds further stability because high-net-worth individuals have more complex, recurring filing needs that are non-discretionary.
The operator advantage here is real: a qualified CPA buyer with an existing staffed practice can absorb this book, raise underpriced fees, and lean on up to two years of owner transition support plus seller financing. The modern tech stack (Lacerte, QuickBooks, SmartVault portal) means the operational heavy lifting is already built.

How to improve it

Audit and reprice the fee schedule immediately, since the listing explicitly flags underpriced services as a growth lever. A 10 to 15% fee increase across a loyal, high-net-worth base with high switching costs would flow almost entirely to the bottom line with minimal churn risk.
Expand the bookkeeping and advisory offering, which currently sits at only $200k of a $1.2M book despite serving affluent clients who often need CFO-level and estate planning support. Cross-selling recurring monthly advisory engagements would raise revenue per client and smooth the seasonal tax cycle.
Add staff capacity to break the sole-practitioner bottleneck, since nearly all revenue currently depends on one person. Hiring one or two licensed preparers would let the firm take on more returns and free the owner-operator to focus on client relationships and business development.
Convert one-time tax clients into year-round engagements by pitching tax planning retainers rather than just annual return prep. This tightens the recurring revenue profile and increases client lifetime value in a book that already renews by default each filing season.
Formalize a referral and succession pipeline to protect the goodwill that makes this practice valuable. Documenting client relationships and systematizing the referral engine during the two-year transition reduces key-person risk and preserves the moat under new ownership.
Negotiate the Wilshire lease ahead of its July 2028 expiry or evaluate a smaller footprint, given that most clients transact through the SmartVault portal and rarely visit. Lower occupancy cost or a renewal on favorable terms protects the margin profile long term.

Diligence notes

Scrutinize client concentration and retention, since a high-net-worth book can carry a few outsized accounts whose departure would materially dent the $1.2M in revenue. Pull a client-level revenue breakdown and historical retention rates before relying on the first-year revenue guarantee.
Verify the structure and backing of the seller's first-year gross revenue guarantee and the seller financing terms, since these are central to the deal's downside protection. Confirm what triggers a clawback, how it is funded, and whether the two-year transition commitment is contractually binding.
Assess key-person risk, because this is a sole practitioner whose 40-year relationships drive the referral engine. Test how transferable the goodwill actually is, since affluent clients may be loyal to the individual CPA rather than the firm, and model attrition in the first two filing seasons.
Confirm the SDE build and normalize for owner compensation, since at $800k cash flow the figure likely includes substantial owner labor that a buyer with a staffed practice would need to replace or absorb. Reconcile the $1M+ tax and $200k accounting revenue split against three years of filed returns and billing records.
Review the lease terms and the July 2028 expiration, including renewal options and rent escalation, given the prime Wilshire Blvd. location. Understand whether the landlord will renew on comparable terms since relocation could disrupt the client base.
Validate buyer eligibility constraints, since the seller requires a California-licensed CPA with 10 to 15 years of experience and preference for a staffed acquirer. Confirm your licensing and capacity meet the requirements before investing diligence time, as these gates narrow the buyer pool.

Source

Originally listed on BizBuySell. View original listing →