While most professionals will focus on the multiple when valuing an accounting firm, the multiple is the effect. We need to understand the cause. There are 5 main variables that impact how you value a firm.
1) Cash up front; if any
2) The profitability of the deal for the buyer
3) The duration of a retention period if any. This refers to whether or not post retirement; the purchase price is adjusted based on client retention
4) The length of the payout period
5) The multiple