What is Goodwill in an Accountancy Practice Sale?

Practice Valuation

What is Goodwill in an Accountancy Practice Sale?

Goodwill is often the biggest part of an accountancy practice sale. This article explains what goodwill is, how it’s valued, and why it matters when selling your firm.

Alfie Charles | September 3, 2025 | 2 min read

Over the years, a firm owner found that buyers often value much more than the desks and software. That extra amount is goodwill. As a practice owner, that resonated—clients didn’t just pay for tasks. They paid for trust, reputation, and smooth service. Kingsman Partners helps owners understand that goodwill isn’t just on the balance sheet—it can make the sale.

Goodwill is the premium paid above the fair value of a practice’s net assets, capturing its reputation, client trust, and recurring income potential. In simple terms:

Goodwill reflects many hidden strengths:

• Brand and reputation that draw clients

• Long-term client relationships and loyalty

• Team skills, processes and working systems that keep clients happy

Goodwill appears in practice valuations in two ways:

1.Multiple of profit—often used to back into an implied goodwill figure by applying a multiplier to recurring profit (e.g., EBITDA) and subtracting net assets.

2.Residual basis—an overall practice valuation is calculated, then net tangible assets are subtracted to find goodwill.

There’s also a special category of goodwill: personal goodwill. This attaches to an individual owner’s reputation and relationships rather than the firm. In sales, personal goodwill may be recognised separately for tax benefit or structuring flexibility.

Goodwill isn’t amortised under UK accounting rules. Instead, it’s tested for impairment each year to ensure its value remains accurate.

When goodwill is properly valued, it can significantly uplift the sale price. If you want to understand what part of your firm’s value is goodwill—and how to capture it in a sale—Kingsman Partners can help.