Practice Valuation
Valuing a Cloud-based Accountancy Practice vs Traditional Firm
Cloud-based accountancy firms often achieve higher valuations than traditional practices. This article explains why buyers pay premiums for efficiency, scalability, and stronger client retention, and how practice owners can prepare for sale in today’s market.
| September 18, 2025 | 2 min read
When one buyer reviewed two firms last year, the numbers told a story. Both had similar fee income. Yet the cloud-based practice achieved a higher offer. Why? Buyers saw stronger growth, better efficiency, and systems less reliant on the owner. That difference is shaping how firms are valued in 2025.
Cloud-based accountancy practices are often seen as more profitable and flexible. A Wolters Kluwer survey found 71% of cloud practices reported improved profitability in 2023, compared with 55% of firms overall (Wolters Kluwer, 2023). Buyers like predictable income, but they pay a premium when systems support growth.
Cloud models also offer higher perceived client value. Research highlights that firms using cloud platforms deliver more convenience, flexibility, and scalability—features that boost long-term client retention and attract better multiples (Poe Group Advisors, 2023).
Traditional firms still carry weight in valuations, especially if they have loyal clients and stable recurring fees. But when practices rely on manual systems, buyer confidence falls. Old-style processes raise questions about staff efficiency, risk, and future scalability.
Buyers now compare models closely. A study on cloud adoption in professional services shows cloud systems improve efficiency, cut reliance on key individuals, and strengthen data security—qualities linked to higher valuations (ResearchGate, 2024).
In practice, this often means:
• Cloud firms may reach multiples closer to the higher end of 1.2–1.7× GRF, thanks to efficiency and retention.
• Traditional firms with weaker systems may sit at 0.8–1.0× GRF, unless they show strong stability and client trust.
• Larger cloud practices with solid EBITDA can sometimes achieve 6–10× EBITDA multiples from private equity buyers.
Valuing a practice in 2025 means more than looking at fees. Buyers judge efficiency, scalability, and profit as much as recurring revenue. Cloud-based models score higher across all three.
Understanding these differences helps owners prepare for sale with realistic expectations. Kingsman Partners can guide practice owners in assessing whether their firm’s model is priced fairly—and how to highlight strengths when entering the market.
Saul Tiano – Partner at Kingsman Partners
If you’re considering a sale or acquisition, Kingsman Partners is here to help. Schedule your meeting here.
