Buying an Accounting Practice: Acquisition Loans for CPA and Bookkeeping Firms

By MercFinancial · Published 2026-10-22 · Updated 2026-10-21

Buying an accounting practice is usually financed with an SBA 7(a) or practice loan for most of the price, a buyer injection and a seller note tied to client retention. How the pieces fit and what lenders require.

Buying an accounting practice is usually financed three ways at once: an SBA 7(a) or specialty practice loan for most of the price, a cash injection from the buyer, and a seller note whose balance often adjusts to the clients who stay. Lenders like these purchases because the asset being bought is a recurring fee base, and they structure them around the one risk that matters, which is whether the clients transfer to the new owner. Banks, non-bank SBA lenders and practice lenders all write accounting practice acquisitions, for CPAs buying a retiring practitioner's firm and for bookkeepers buying a competitor.

This guide covers how accounting practices are valued and why retention-based pricing exists, the loan products that fund a purchase and how a seller note fits beside them, the transition period lenders want to see, the due diligence and documents a strong file includes, an illustrative purchase structure, the mistakes that sink these deals, and how a brokerage places one file with the funding sources whose policy fits.

The buyer is paying for client relationships that have not yet agreed to move, so the price, the seller note and the transition are designed together.

How accounting practices are valued, and why retention pricing exists

Accounting practices are commonly priced as a multiple of annual gross fees, with the multiple moving up or down for the quality of the revenue. Recurring tax, bookkeeping, payroll and advisory fees are worth more than one-time projects. A client base of operating businesses is worth more than one of elderly individual filers. Fees that are current with the market, realization that is high, staff who are staying and a modern software stack all push the multiple up. The number that matters is what the practice earns for an owner after paying a replacement professional to do the owner's work.

Because the asset is a set of relationships, most deals carry some retention mechanism. The common forms are a seller note whose principal is reduced if collected fees fall below a threshold after one or two years, a holdback released on the anniversary, or an earnout paid as a share of collections from the transferred clients. Lenders like these structures because they keep the seller motivated through the transition and move part of the attrition risk off the loan. The headline price assumes the clients stay.

The loan products that fund a CPA practice purchase

A practice purchase is a goodwill transaction with almost no hard collateral, so the products that fund it are the ones built for cash-flow lending.

• SBA 7(a) loans are the workhorse. Accounting firms are eligible, goodwill can be financed subject to the lender's policy, and the long term keeps debt service comfortable against the practice's cash flow. Lenders commonly require an equity injection from the buyer on a change of ownership, personal guaranties from each significant owner, and a review of the transition agreement. Under current SBA rules a seller note placed on full standby for a period may count toward part of the required injection, which the lender confirms deal by deal. The general requirements are in the SBA loan requirements checklist.
• Practice loans from lenders that specialize in professional practices. Many practice lenders underwrite primarily on collections and recurring revenue, close faster than an SBA loan, and are comfortable with a lighter injection when the buyer's credentials and the practice's history are strong. Pricing and term vary with the funding source.
• Conventional bank term loans for an existing firm buying a second practice, where the buyer's own cash flow and relationship carry the credit. The most demanding file and often the best price.
• Seller notes sit beside any of these. Commonly a meaningful minority of the price, subordinated to the lender, often on standby for a period and often tied to retention. A seller who refuses any note is telling the buyer something about the client base.
• A working-capital line opened at closing, because the buyer inherits the seller's seasonal cash cycle on day one. The head-term guide to accounting firm loans covers how that line is sized.

The broader mechanics of buying any business, including letters of intent and quality-of-earnings work, are in business acquisition financing options.

The transition period, and what lenders want to see in it

Every lender financing an accounting practice purchase asks the same question in different words: how will the clients learn that they now belong to the buyer, and who will tell them. The answer is the transition agreement. The seller commonly stays through at least one tax season, often two, introduces the buyer personally to the significant clients, co-signs the announcement letter and remains available for questions. The seller signs a non-compete and non-solicitation covenant for a stated period and territory.

Lenders also look at the buyer's credentials against the work being bought. A practice with attest engagements needs a licensed CPA to own it. A tax-only practice can be bought by an enrolled agent or an experienced preparer in many states, and a bookkeeping practice by an operator with the staff to do the work. Staff retention is part of the same test: if the clients know the senior preparer better than they know the seller, the lender wants that preparer under an employment agreement before closing. A buyer with a signed transition plan, a staff retention plan and a client communication timeline has answered the question that most often declines these loans.

Illustrative example: a $900,000 practice purchase

Illustrative example: a hypothetical CPA buys a tax and bookkeeping practice with $900,000 in annual fees for $900,000, a one-times multiple. The seller stays through two tax seasons. Roughly $300,000 of the fees are paid monthly on bookkeeping and payroll engagements and the rest are tax and advisory fees collected in the spring.

The numbers are round and hypothetical, and the lender sets the real injection, the note terms and the pricing. The point is the sequence: the lender underwrites the practice's cash flow after a replacement salary for the buyer, checks that it covers the loan payment with room to spare, and then checks that the seller note and the transition plan protect that cash flow if some clients leave.

Mistakes that sink accounting practice acquisitions

• Buying gross fees instead of owner cash flow. Two practices with the same revenue can produce very different earnings once a replacement professional is paid. Build the projection from the seller's returns, not from the broker's summary.
• No retention mechanism. Paying the full price in cash at closing moves every client-attrition risk to the buyer and the lender, and many lenders will not finance a goodwill purchase on that basis.
• A transition that is too short. One season is the common minimum. A seller who wants to leave at closing is a reason to lower the price or walk away.
• Ignoring the client base's age and fee levels. A practice of long-retired individual filers at fees unchanged for a decade will shrink no matter how good the buyer is.
• Missing a staff agreement. If the senior preparer leaves with the clients who know her, the valuation walks out the door.
• Applying to one lender. SBA lenders, practice lenders and banks price goodwill differently. The first approval is rarely the best one.

Where MercFinancial fits

MercFinancial is a commercial funding brokerage in Houston, not a lender, and it does not have an accounting practice program or a promise of approval. It reads the deal first: the practice's returns and fee mix, the buyer's credentials and injection, the seller note and the transition plan. From there it identifies which of its more than 160 funding sources have a credit policy that allows a professional practice acquisition, whether an SBA 7(a) lender, a practice lender or a bank, places one file with them and compares the offers side by side. Whether a product is available depends on the funding source. When nothing fits, you are told that plainly, along with what would change the answer. A free call with a funding specialist is the usual next step, and the wider picture is on the accounting firm business funding hub, alongside the firm's other business funding options.

Frequently Asked Questions

Can I get an SBA loan to buy an accounting practice?

Yes. Accounting, CPA and bookkeeping firms are not excluded by 13 CFR 120.110, and SBA 7(a) loans are commonly used to buy them, goodwill included, subject to the lender's credit policy. Expect an equity injection from the buyer, personal guaranties, a seller note that is often subordinated and on standby, and a review of the transition agreement. The lender decides approval, amount and terms.

How much is an accounting practice worth?

Practices are commonly priced as a multiple of annual gross fees, adjusted for how much of the revenue recurs, the quality and age of the client base, fee levels, staff and the transition the seller offers. The multiple is a shorthand. Lenders and careful buyers value the practice on the cash flow it produces after paying a replacement professional, and on how much of that cash flow survives the handover.

How much cash do I need to buy a CPA practice?

Lenders commonly require an equity injection from the buyer on a change of ownership, with the amount set by the lender and the program. Under current SBA rules a seller note placed on full standby may count toward part of that injection, which the lender confirms deal by deal. Beyond the injection, plan for closing costs and working capital for the first busy season.

What is retention-based pricing in an accounting practice sale?

It is a price that adjusts to the clients who stay. Common forms are a seller note whose principal is reduced if retained fees fall below a threshold after a year or two, a holdback released on an anniversary, or an earnout paid from collections on the transferred clients. Lenders like it because it keeps the seller engaged through the transition and moves part of the attrition risk off the loan.

How long does the seller need to stay after the sale?

Through at least one tax season is the common minimum lenders want to see, and two is better for a tax-heavy practice. During that time the seller introduces the buyer to significant clients, co-signs the announcement and remains available. The seller also signs non-compete and non-solicitation covenants. A seller who insists on leaving at closing is a reason to reduce the price or reconsider the purchase.

MercFinancial is a commercial funding brokerage in Houston, Texas. MercFinancial is a broker, not a lender: every loan is made by a third-party funding source, every request is subject to that source's underwriting and credit approval, and loan amounts, advance rates, interest rates, terms, fees, collateral and guaranty requirements vary by funding source and borrower and are not guaranteed. Nothing here is a commitment to lend or an offer of credit, and financing is for business purposes only. Any example in this guide is hypothetical and illustrative; actual terms and outcomes vary. Financing availability for any business depends on the funding source's own policies, the borrower's qualifications and applicable state and federal law; nothing here is legal, tax or financial advice. This guide is educational only and is not legal, tax, accounting or investment advice.