Thirty Recent Practice Sales: Who, What & Why Unpacked

Published November 2024

Last week we released our latest six monthly Market Data and Insights including trends in selling prices,  levels of buyer activity, retention terms and how long sales are taking.

As with previous years, we are now taking a closer look at the profile of the thirty recent practice sales that underpin this Market Data: Their primary service lines, levels of fees sold,  age of sellers, reasons for selling and the gender of buyers and sellers.

Demand for practices remains very high and competition is intense with a diverse pool of buyers both local and interstate, large and small. Sellers cannot be complacent though. Whether you are planning to buy or sell,  this is a valuable read to build your understanding of the market and set yourself up for a successful outcome. 

Key Findings

Service Lines

The majority of practices sold focus on core tax and accounting services, including business advisory. However, we continue to see strong demand for bookkeeping practices as well as specialist audit and SMSF administration.

Fees Sold

The majority of practices sold across Australia will always skew towards smaller practices (<$1 million) given the significant number of these across Australia and the propensity for larger practices to better internal succession planning. However, 40% of the practices sold had fees over $1 million.  The largest practices DMY currently has in market are three practices ranging from $4.5 million - $ 6 million in fees.

Age of Seller

The majority of sellers (c.60%) are aged under 60 which is consistent with our last Market Data Deep Dive in April 2024 and is one of the more interesting trends post Covid.  Five years ago the majority of sellers would certainly have been over 60.  We are not surprised at this trend which we expect to see continue. It is getting harder to successfully run a small practice  - particularly finding and retaining talented accountants and managing regulatory complexity - and more and more owners are electing to sell earlier in their careers for reasons other than retirement. Our two youngest sellers this period are both in their thirties!

Reason for Selling

Consistent with the data on seller's age only c. 50% are selling because they are ready to retire. Other key reasons driving the selling decision include a career or lifestyle change, gaining access to greater resources (by way of a merger) and a medium term transition to retirement where the owner is choosing to continue on with the purchaser for an extended period (for example, up to 5 years.) 

Gender

Nearly 40% of sellers are female which is broadly in line with the last period.  There remains a significant gender gap amongst buyers with only one female buyer amongst the cohort of thirty.  We continue to believe this a disappointing outcome as we regularly encounter experienced and capable female practice owners looking to accelerate their growth through acquisition. We retain confidence that the percentage of female buyers will increase over the medium to long term.

The Wrap

It will come as no surprise that the most common profile of a practice owner selling continues to be: male,  fees under $1 million, and looking to retire.  However the dominance of this profile is rescinding as we continue to see female owners coming to market and the age range of sellers extend all the way through to owners in their thirties.  Running a successful accounting practice is complex and requires a lot of energy and commitment. Increasingly we are seeing more owners deciding to sell earlier in their careers either for career or lifetstyle choices or simply to retire earlier and enjoy the fruits of their labour. 

There is clearly not one size that fits all and understanding these nuances is important to succeed in today's competitive market for practice sales.

• Sellers should go to market understanding why they are selling, what is most important to them from the sale, and what they want to do in transition, and be able to articulate this with clarity and confidence.
• Buyers who take the time to understand the seller's perspectives and provide flexible solutions to meet their needs, will stand out from the pack and be successful with their acquisition strategies.

To discuss these findings in more detail and what they mean specifically for your situation, contact DMY’s Directors below:

Mark Emney

Mobile: 0434 079 530
Email: mark@dmyassoc.com.au

Daniel Jones

Mobile: 0401 493 773
Email: daniel@dmyassoc.com.au