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Almost every CPA firm owner I know ends up having the same conversation sooner or later. What is our firm worth? Sometimes it happens because someone is thinking about selling. Sometimes it happens because a new partner is coming in and needs to buy equity. Sometimes the trigger is an estate question, a divorce, or simple curiosity.
To answer that question, the math is straightforward:
Firm value = revenue x multiple.
What is less obvious, and rarely discussed openly in the profession, is that "revenue" and "multiple" are independent levers, and most CPA owners have spent an entire career pulling only one of them — the revenue lever.
For standalone tax-and-accounting practices, the multiple tends to anchor around 1x revenue. Buyers, sellers and practice brokers broadly agree on this number, with some extra compensation built in for firms with an attractive growth rate, service mix and/or geography. The more interesting fact, and the one most owners never encounter, is that the same firm, repositioned in a specific way, can trade at 2x revenue or higher. Same staff. Same client list. Same office. A different multiple.
The lift most owners have available to them today is not on the revenue lever they have pulled their whole career. It is on the multiple lever they may never have touched.
Lever 1: The one every owner already knows
Revenue is what most firm owners instinctively work on, and for good reason. Revenue is visible, measurable and controllable. Raising fees, adding advisory lines, landing a new niche, hiring another partner, etc. are all ways to boost topline revenue. These are familiar moves, and they all show up in the value of the firm.
The problem is that for a compliance-heavy practice, the revenue lever has a ceiling. Technology is compressing the time required for much of the traditional work, which is putting long-term pressure on fees. Talent scarcity caps how quickly a firm can scale its capacity. Client acquisition for a traditional CPA practice is slow, relationship-driven and hard to systematize. Revenue growth matters, but for most firms, it produces linear gains against real operational constraints.
An owner who only pulls the revenue lever for 10 years can end up with a meaningfully bigger firm than they started with — still trade at only 1x revenue when the conversation about sale, succession, or buy-in eventually arrives.
Lever 2: The one nobody ever teaches
In contrast, the multiple is the lever that most CPA owners never learn to pull, because nothing about running a tax-and-accounting practice teaches them to do this. The multiple is not really a property of the firm itself. It is a function of who can credibly buy the firm, and what those potential buyers believe they are buying.
A strategic accounting acquirer is buying two things — (1) compliance revenue and (2) owner goodwill — and will price their offer accordingly. However, a wealth-oriented buyer who has an integrated service model is buying something quite different. They're buying a book of clients with a pre-existing tax-and-wealth relationship, long retention curves, recurring fee economics and the kind of household-level integration that is difficult to assemble from scratch. The second buyer is willing to pay a premium, because the asset they are underwriting is not the same asset that the first buyer is underwriting. That's why they'll offer a multiple far above 1x revenue.
The important consequence for the firm owner is this: When the only credible bidders for a firm are strategic accounting acquirers, the multiple is bounded by what those buyers can rationalize. That ceiling is what pushes most firms toward 1x — and keeps them stuck there, regardless of how much revenue growth the owner adds on top. The moment the firm becomes sellable to a second kind of buyer, that ceiling lifts. The firm did not suddenly become more valuable in any operational sense. It became eligible for a different kind of bid.
The structural change that unlocks a second bidder is the one described in my
Why the two levers reinforce each other
The interesting relationship between the revenue lever and the multiple lever is that a single structural change moves both.
Most small and midsized CPA firms carry a significant number of individual high-net-worth clients who do not fit neatly into the business-focused engagements the firm is built around. These clients have complex personal and often business lives. They consume senior time that is disproportionate to their fees. Further, these clients rarely receive the attention that their complexity deserves, and they are often the clients the firm would most like to serve better — if only it could. Building a dedicated integrated capability, whether through a hire, a partnership or a joint venture, gives those clients a service model designed just for them and takes them off the core team's plate.
That second effect is where Lever 1 (revenue) moves. The senior capacity absorbed by individual returns and one-off planning questions is redirected toward the core business-client practice, where revenue growth is most productive for this kind of firm. The integrated capability built to serve the individual clients is the same capability that repositions the firm for a larger bidder pool, which moves Lever 2 (multiple). Most operational decisions pull one lever or the other. Integration pulls both levers, which is why its return is nonlinear relative to the effort required.
The decision most owners never make
The reason most CPA firms trade at 1x has less to do with their operations and more with the fact that no one ever framed the multiple lever for them. The profession teaches revenue growth. It does not teach expansion of multiples. When the eventual sale, succession or partner-buy-in conversation arrives, most owners are surprised to discover their firm is being priced by a bidder pool they never thought to influence.
Pulling the multiple lever is not a late-stage move. It cannot be bolted on in the year before a sale. The buyers who pay for integrated capability are looking for something that has operated long enough to prove itself: real client transitions, real integrated service delivery and real retention behavior over time. That kind of evidence takes two or three years of deliberate work to produce, which means the time to start working on the multiple lever is years before any exit conversation begins.
The next and final piece in this series walks through what that work actually looks like inside a firm: build, partner or joint venture; what to sequence first; and the common mistakes that keep firms stuck on Lever 1 when they believe they are pulling Lever 2.
