Small practices (generally under $1 million in annual fees) are commonly sold to external buyers for over one times fees, often as much as 125 percent of fees. Yet, when partners retire from a multi-partner firm and are paid retirement benefits, the valuation average across the country has been steadily sinking over the years and is now well below 100 percent.

In fact, the 2004 Rosenberg MAP Survey reported average retirement benefits of roughly 80 percent of fees. How can the retiring partner justify getting only 80 percent from her partners, when other small firms are routinely being sold for as much as 125 percent of fees?

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