The average EBITDA multiple of comparable companies is approximately 4.8x.
The selling price relative to revenue is about 1.1x.
EBITDA = Earnings Before Interest on long-term and short-term debt, Taxes, and Depreciation.
In the professional services sector in general, the average EBITDA multiple over the past 12 months is about 3.3x, and approximately 5.9x for the highest multiple during the period (Q2 2024).
Market share of the top 4 players in the U.S. accounting industry:
Deloitte: 9%
EY: 4.2%
PWC: 4.1%
KPMG: 2.5%
Market share of the top 4 players in the Canadian accounting industry:
Deloitte: 26%
EY: 9.5%
PWC: 9.2%
KPMG: 7.2%
Number of establishments:
U.S.: 86,640 establishments generating $139.5 billion in revenue
Canada: 29,032 establishments generating $17.2 billion in revenue
Quebec: 6,270 establishments generating $3.6 billion in revenue
% of revenue by service segmentation in the U.S.:
Financial audit: 36.6%
Personal tax preparation (T1): 18.2%
Corporate tax preparation (T2): 13.1%
General accounting: 11.6%
Financial statement review: 2%
% of revenue by service segmentation in Canada:
General accounting: 24.9%
Consulting services: 17.6%
Corporate tax preparation (T2): 16.9%
Personal tax preparation (T1): 6.8%
Restructuring and tax advisory: 4.1%
Stable and predictable revenue (recurring revenue) High profit compared to industry peers Low client concentration Low service concentration Low capital investment required Legally mandated service
Low barriers to entry High competition Low revenue per employee
Projected revenue growth through 2029 Strong demand for financial and insurance services Expand consulting services (Tax division, M&A division, R&D division, ESG specialty division, certification division, etc.) Use of artificial intelligence to reduce HR costs by automating routine tasks Outsourcing of routine tasks to other countries Strategic acquisitions
Staying current with new accounting and tax regulations
Leveraging new technologies to improve operations and client service
Maintaining a diversified client base across industries
Employing skilled and specialized staff
Building a strong reputation through client service (accuracy and reliability)
Offering various specialized services (tax, legal, M&A, R&D, ESG, etc.)
Being located in areas that attract qualified professionals
United States:
Average current ratio = 1.8 (2023)
Expense breakdown as % of revenue (2023):
Salaries: 40.9%
Rent: 3.9%
Profit margin: 17.1% (U.S.); approx. 34.6% in Canada (Ibisworld)
Average EBITDA margin: approx. 26.7% (DealStats)
Is your firm specialized in a niche area or does it offer a wide range of accounting services?
Has your firm considered acquisition opportunities in well-established metropolitan areas?
What measures are in place to protect confidential information?
How is your firm investing in technology (e.g., mobile apps) to differentiate from competitors?
Is your firm well prepared to adapt to regulatory changes?
How does your firm manage seasonal cash flow fluctuations?
What steps is your firm taking to improve profitability?
IBISWORLD
“Accounting Services in Canada” – NAICS (54121 CA) – July 2024
“Accounting Services in the US” – NAICS (54121 CCA) – August 2024
BVR
DealStats – NAICS (54121) – Revenue between $0 and $3,000,000
DealStats Value Index Q2 2024
Important Note
This is intended only as a rule of thumb. Many positive and negative factors can influence the results above. Each business is unique. Additionally, the selling price largely depends on the number of interested buyers, their synergies with the target company, and the return they seek.
Disclaimer
pntt makes no representations to any party regarding the completeness or accuracy of the data or information contained in this document. pntt accepts no liability and disclaims all responsibility for any loss or damage incurred as a result of the use of the information contained herein.
Everything you need to know about selling and buying a business.
We’re offering a newsletter where you can learn more about our businesses for sale, sub-offers and sales. In addition, we’ll be sharing a wealth of useful information on selling and acquiring businesses in the form of blogs, articles and videos. Click on the button below to become part of our community.
Every transaction contributes to reaching our goal with the Make-A-Wish Canada Foundation. Learn more about this initiative & donate to the cause!!
Chaque transaction contribue à atteindre notre objectif auprès de la fondation Rêve d’enfants. Apprenez-en plus sur cette initiative & donné à la cause!