Firm value is adjusted EBITDA multiplied by a number that buyers decide. This guide explains where that number comes from and what moves it.
The familiar rule of thumb—one times gross revenue—comes from small, retirement-driven practice sales, often paid out over years and tied to how many clients stay. It is a payout formula more than a valuation.
Modern accounting and advisory firms of meaningful size are bought on adjusted EBITDA: earnings before interest, taxes, depreciation, and amortization, with owner compensation normalized to market rate and personal or one-time items removed. That is the number a buyer underwrites, because it is the earnings the buyer will own.
Value is then that adjusted EBITDA multiplied by a multiple. Two firms with identical revenue can land far apart, because the multiple is a judgment about risk and durability—not a lookup table.
Buyers price risk. Each driver below either makes future earnings more believable or less.
Buyers pay for earnings they can count on next year. Multi-year relationships, recurring engagements, and low attrition make the earnings stream credible. Concentration in a few large clients cuts the other way.
Revenue per FTE is a fast read on pricing discipline and workflow quality. A firm that produces more revenue per person, without burning its team, converts more of each dollar into EBITDA.
A firm growing under its own momentum is worth more than a flat one with the same earnings. Buyers are underwriting the next several years, not last year.
Advisory and client accounting work with monthly cadence tends to be valued differently than compliance-only work compressed into filing season.
A management layer that can run engagements, review work, and hold client relationships reduces the buyer's integration risk directly.
This is usually the largest single swing factor. If clients belong to the owner and the work runs through the owner's head, the buyer is acquiring a job. If systems, documentation, and the team carry the firm, the buyer is acquiring an asset.
RightExit organizes those drivers into five attributes—Growing, Reliable, Efficient, Automated, and Transferable. They are a structured way to see where a firm is strong and where a buyer will discount, well before anyone goes to market.
The attributes are a planning lens, not a pricing formula. No score sets a multiple or guarantees a premium.
Take the GREAT AssessmentAny multiple you read in an article is someone else's transaction, with terms you cannot see. Price, structure, earn-outs, retention holdbacks, and transition expectations all move together—a headline multiple without its terms tells you very little.
The practical sequence: normalize earnings, assess the firm honestly against the drivers above, form a supportable range, then validate it confidentially with qualified buyers before committing to a number publicly.
How market validation works