Practice valuation has a folklore problem: every owner has heard "one times gross" from someone, and almost nobody has seen the comps. Here is what the listed market actually shows for small firms, with sources, and the factors that decide where a specific firm lands.
For owner-operated practices under roughly $2M in revenue, the trading currency is a multiple of gross revenue, not EBITDA. The largest practice-sale broker networks educate buyers that most practices change hands within 80% to 120% of gross, and listed asking prices cluster just above that: a verified scan of California listings in mid-2026 showed asks between 0.99x and 1.43x gross revenue, with most between 1.0x and 1.2x.
80% to 120% of gross
Source: Broker buyer-education materials, verified June 2026
One verified closed comp makes the point concrete: a Mission Viejo, California practice with $176,925 in gross revenue (355 clients, roughly $499 average fee, essentially all individual returns) sold at $230,000, which is 1.30x gross. A pure 1040 book, the kind folklore says discounts hardest, cleared at the top of the band, because small, clean, transferable books in dense metros are liquid.
Revenue mix. Recurring business work (monthly bookkeeping, payroll, business returns with year-round contact) reads as durable revenue; seasonal 1040 volume reads as a book that has to be re-earned every spring. Broker commentary consistently treats recurring-heavy books as commanding stronger multiples, though the premium is directional in the published material, not a quoted number. Treat claims like "1040 books discount 10 to 20 percent" as industry folklore: widely repeated, never cited.
Owner dependence. If every client would name you as their contact, the buyer is buying a job with your name on it. Transferability is the product; key-person risk is its biggest tax.
Fee levels. Underpriced books invite a repricing-risk discount: the buyer assumes attrition when fees normalize. Ironically, raising fees before a sale often raises the multiple and the base it multiplies.
Documentation and books. Buyers of accounting firms read financials for a living. Undocumented process, messy internal books, and no clean client-level revenue data do not lower the offer; they usually prevent one. That failure mode gets its own guide.
Structure, the quiet variable. Headline multiples and deal structure trade against each other. A 1.2x ask with a long earnout and retention clawbacks can be worth less in hand than a 1.0x deal with more cash at close. When a seller anchors at the top of the band, buyers respond with the most buyer-favorable structure; the two never stay at their best simultaneously.
One warning on EBITDA stories. The PE consolidation narrative ("8x EBITDA!") applies to platform-scale firms, generally $2M+ of profit with management depth. Applying platform multiples to a sub-$1M owner-operated practice is how sellers talk themselves out of every real offer they get.
The valuation estimator applies this band and these adjustments to your inputs and shows its work. For the version reconciled against the peer dataset (and refined with your actual numbers), the diagnostic starts with four numbers and returns a valuation range as its first artifact.