How Much Is Your Professional Practice Really Worth?
A Practical Guide to Valuation and Exit Planning for Solo Practitioners and Small Firms
If you run a professional services practice — whether law, accounting, consulting or advisory — you’ve likely asked yourself at some point: What is all this actually worth? Not in abstract terms, but in cold, hard, market value terms.
This isn’t theory. It’s strategic reality you can use to plan with confidence.
1. Valuation Is Not a Formula — It’s a Conversation
You won’t find a single magic formula for professional service firm valuation. Unlike retail businesses or asset-heavy industries, firms built on expertise and long-standing client relationships are unique by design.
That said, most small professional firms tend to sell for a multiple of 0.8× to 2.0× annual revenue when goodwill is factored in — depending on market conditions, practice strength and preparedness.
So if your firm turns over $500,000, for example, a realistic valuation range might be $400,000 – $1.1 million, with the higher end tied to how well you’ve de-risked that revenue stream.
This aligns with general practice valuation logic that ties value to revenue and future earnings potential.
2. Succession Planning Is the Biggest Value Driver
Here’s the kicker: valuation isn’t just about historic figures. It’s about transferability — the likelihood that future income will continue after you exit.
Buyers aren’t buying your past revenue. They’re buying future cash flows and confidence that the business will thrive without you.
In practice valuation terms, this is called key person risk — and it’s the number-one reason buyers discount small or solo practices.
What reduces key person risk?
- Documented client relationships that extend beyond your personal connection
- Standardised operational processes
- Strong, delegated workflows so the business isn’t dependent on a single individual
- Clear succession or transition protocols
Firms with solid succession planning can command 20–30% higher multiples than those without.
3. Goodwill Isn’t Everything — But It’s a Big Piece
Goodwill is often the largest component of value in professional practices — but it’s intangible. That means it’s subjective and requires narrative as well as numbers.
Components that add real value:
- Comprehensive client databases and matter histories that show repeat engagements and referral sources
- Work in progress (WIP) that can be transferred or sold upfront
- Operational infrastructure — even modest support staff and documented systems add credibility
- Local reputation and market position that make the firm more than “Owner + Rolodex”
This reminds us that valuation isn’t just financial — it’s strategic.
4. Work in Progress (WIP) Matters — But the Handling Strategy Matters More
How you treat your WIP in a sale influences value:
Transfer arrangement
Buyer collects outstanding fees after purchase. This often maximises value but requires seller support during transition.
Upfront purchase
Buyer pays a discounted value upfront (often 10–30% less), for immediate payment.
There’s no one “right” option — it depends on your priorities (higher proceeds vs. lower involvement) and the buyer’s capacity.
5. Market Timing and Strategic Positioning Still Matter
Current demand for established practices remains strong in many professional markets — but that doesn’t mean you should rush. Firms that prepare well before they’re ready to sell typically achieve better outcomes.
Tip: Being a non-urgent seller is a strategic advantage. It allows you to:
- Choose the best buyer
- Build a stronger transition plan
- Negotiate better terms rather than accept the first offer under pressure
This kind of strategic patience often gets overlooked in conversations about exit planning.
Takeaway: Value Comes from Transferability and Planning
If there’s one core lesson here, it’s that value isn’t fixed — it’s built. And the work you put into systems, documentation and client transition strategy today directly increases your firm’s future value tomorrow.
Whether you’re thinking about eventual retirement, a partnership transition or just curious about where you stand strategically, it’s worth having this conversation early — not just when you have to.
Next Steps for Practice Owners
- Formalise your succession plan. Even if sale is years away, clarify the pathway so value isn’t tied to one person.
- Document client relationships. Capture matter histories systematically and make the revenue story transferable.
- Organise your financial records. Present your numbers with professional clarity to reduce diligence friction.
- Review and update systems. Clean workflows and a modern tech stack reduce operational risk for buyers.
Want help benchmarking your practice’s value or building a tailored exit plan?
Contact The Quinn Group for a confidential valuation strategy session.
Call 1300 784 667 Enquire OnlineNEED HELP? This article provides general information and should not be considered legal or tax advice. For personalised guidance, please contact our expert team at The Quinn Group by calling 1300 QUINNS (1300 784 667) or +61 2 9223 9166, or submit an online enquiry form to arrange an appointment.
