WHY ACCOUNTING PRACTICES ARE HIGHLY FINANCEABLE Accounting and tax practices are one of the most financeable acquisition targets in today’s market. They offer high recurring revenue, strong client retention, predictable cash flow, and seasonality. These characteristics give lenders confidence and make it possible for qualified buyers to finance the acquisition of an accounting practice using SBA loans or conventional bank financing. What this means for you as a buyer: If you are prepared and structured correctly, financing is very achievable. Most failed transactions are not due to lack of capital, but to misaligned expectations about how deals actually work. HOW ACCOUNTING PRACTICE ACQUISITIONS ARE STRUCTURED TODAY Many buyers begin the process believing they can buy a CPA firm with little or no money down, relying heavily on seller financing. In today’s market, that is not how most successful transactions are completed. Modern deal structures are typically built around three components: bank or SBA financing (primary source of capital), limited seller financing (if used at all), and buyer equity (your down payment). This shift reflects a simple principle: The buyer, who takes control of the business on day one, is expected to bear the majority of the risk. BANK FINANCING: THE PRIMARY WAY TO BUY AN ACCOUNTING PRACTICE Most buyers finance the acquisition of a CPA or accounting practice using SBA 7(a) loans or conventional bank financing. Typical structure: 70% to 90% bank financing, 10-year amortization terms, and payments aligned with the practice’s cash flow. Lenders are comfortable with accounting firms, but they are underwriting both the practice (recurring revenue, staff, retention) and the buyer (experience, financial strength, liquidity). What this means for you: Preparation matters. Buyers who are organized, responsive, and financially credible move faster, qualify more easily, and are more competitive when pursuing quality practices. SELLER FINANCING: LIMITED AND SITUATIONAL Seller financing still plays a role in some accounting practice acquisitions, but it is no longer the foundation of most deals. When it is used, it typically represents 10% to 20% of the purchase price, has three-to-five-year repayment terms, and serves as a bridge, not the primary capital source. In competitive transactions, especially for high-quality firms, seller financing may not be included at all. What this means for you: Buyers should not rely on the seller to finance the deal. The strongest buyers come prepared with bank financing and view seller participation as a bonus, not a requirement. YOUR DOWN PAYMENT: WHAT BUYERS SHOULD EXPECT Most buyers should expect to contribute approximately 10% to 15% of the purchase price. This is often one of the most common questions: “How much money do I need to buy an accounting practice?” The answer depends on the deal, but this range reflects current market norms. Your down payment demonstrates commitment, establishes credibility with lenders and sellers, and ensures you have meaningful “skin in the game.” FINANCING THE ACQUISITION OF A TAX AND/OR ACCOUNTING PRACTICE A Practical Market Guide BY ACCOUNTING PRACTICE SALES What this means for you: Buyers who are undercapitalized often struggle to get deals approved or accepted. A well-prepared buyer with sufficient liquidity is far more competitive. UNDERSTANDING RISK: WHY IT FOLLOWS THE BUYER When you acquire an accounting practice, you take control of client relationships, staff, operations, pricing, and service delivery. Because of that, you also assume the majority of the transition risk. Structures that attempt to combine low down payment, heavy seller financing, and strong performance guarantees are rarely successful in today’s environment. They create misalignment and shift too much risk back to the seller. What this means for you: If you want to be taken seriously by sellers and lenders, your structure should reflect that you are prepared to take ownership of both the opportunity and the risk. CONCLUSION Financing is not just about completing the purchase; it is about setting the foundation for a successful transition. Well-structured transactions align risk with control, support stable post-closing cash flow, reinforce buyer accountability, and increase the likelihood of long-term success. Buyers who understand how to finance the acquisition of an accounting practice in today’s market are more credible, more competitive, and far more likely to close successfully. Ultimately, today’s buyer will one day become a seller. Understanding these structures now will shape better outcomes in the future. Contact Accounting Practice Sales today for a free and confidential consultation. To learn more, call or email Trent Holmes at Accounting Practice Sales at (800) 397-0249 or trent@aps.net. 20 Nebraska CPA
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