Historically, accountancy practices were valued on the basis of a multiplier of their turnover when they were selling to other practices. Consolidators - often funded by private equity - have changed that and higher multipliers of EBITDA or profit are possible for the right type of practice. Often consolidators will only look at practices with a turnover of at least £1 million unless the practice has a good niche.

There are steps that you can take to make your practice more attractive to consolidators such as:

• have your clients pay on a monthly subscription model so that there is a regular and predictable cash surplus coming in every month and no debtors
• evidence that the practice can run itself without you - can your team take sales meetings, create engagement letters, etc. If the practice cannot run without you then any buyer would have to recruit to fill your role which could be a deterrent
• signal your availability to help with the transition - this will benefit you as it should reduce the chances of claw back claims if you do help
• streamlined and efficient processes
• up-to-date cloud accounting software
• branding that is built on the practice rather than the owner
• a young and growing client base that you provide advisory services to.

Bhimal Hira got backing from a private equity firm to turn his practice into a consolidator before eventually selling the practice to that private equity firm. Read about his journey and what consolidators and private equity look for in practices.