What Texas CPA firms, law firms, engineering practices, and consulting businesses need to know before selling. Buyers, valuation, client transition, and what actually closes deals.
Think about a restaurant where the chef is also the menu. Every reservation is really a reservation for him. Every table that keeps coming back is coming back for him. The food is good. The reviews are great. The dining room is full on Saturdays. The only problem is that he cannot leave. Because the moment he walks out, the restaurant is not a restaurant anymore. It is a room with tables.
That is a professional services firm. And it is most of them, at some point in their life.
I have sat across from CPA partners, engineering principals, and consulting firm founders who had built genuinely impressive practices. Real revenue. Loyal clients. Staff who had been there a decade. And when we got into the conversation about what the business was actually worth to a buyer, the number was lower than they expected. Not because the business was bad. Because the business was them. That gap, between what a firm produces and what a buyer will pay for it, is the thing this article is about.
Revenue quality matters more than revenue size. Retainer-based or recurring engagements are worth more to a buyer than project-by-project work. A consulting firm billing $200K per month under recurring contracts looks very different from one that generates the same revenue through one-off engagements. The recurring firm has something to underwrite. The project firm has a track record. Those are not the same thing to a buyer writing a check.
Client concentration is the most common deal risk in professional services acquisitions. If one client represents 30% or more of your revenue, buyers will model what happens when that client leaves. And they will assume it might. Diversified client bases with no single client above 15–20% of revenue trade at a premium. Concentrated books face hard questions in diligence. Some of those questions do not have good answers.
Then there is the partner dependency problem. I have seen this restructure more professional services deals than any other single issue. Firms where two or three partners control all the client relationships face the steepest discounts, every time. Before you go to market, document what each client relationship actually requires to service, and whether a non-founder can do it. If the honest answer is no, that is the work to do before you call a buyer.
Professional services firms in Texas typically trade at 3x–6x EBITDA. That range is similar to specialty contracting, but the drivers are completely different. In contracting, equipment and labor determine where you land. In professional services, it is revenue quality, staff capability, and client transferability. Same multiple range. Very different conversation to get there.
Owner compensation addbacks are often larger in professional services firms than in other sectors. Many founders pay themselves well above a market-rate replacement and run personal expenses through the business. Both are standard and legitimate. But they need documentation. Buyers and their lenders will normalize EBITDA to reflect what it would cost to replace the owner with a hired professional. Revenue per employee also matters. Firms that generate high revenue per head with documented processes and templated deliverables command the top of the range.
Firms where the partner has to personally review everything before it leaves the building do not. That bottleneck is visible in your numbers, your staff turnover, and your hours logged. A serious buyer will find it. Which is, I will tell you, not the moment you want them finding it for the first time.
I knew a CPA firm partner who had built a solid practice. 120 client relationships, $2.8M in revenue, 22 years of work. He figured 90 days was enough to transition everything and move on. His buyer believed him, because the seller believed himself. By month three, a third of those clients had found other accountants. Not because they were unhappy with the service. Because they had chosen him. They did not know the new firm existed until the firm sent them a letter saying it did.
The most effective way to address client attrition risk is to plan the transition explicitly and put it in the deal structure. A transition period of 12–18 months, where the seller stays actively involved in client relationships alongside the incoming team, substantially reduces that risk. Earnouts tied to revenue retention over that period are common and reasonable. They protect the buyer and they give the seller a financial reason to stay engaged.
The seller who frames the transition as a genuine partnership, not a handoff, gets a better deal structure and a smoother close. Buyers pay more for certainty. And in a professional services deal, certainty comes from a seller who is invested in the outcome past the closing date.
SBA 7(a) financing is available for most professional services acquisitions, but not all. Law firms and medical practices have specific SBA restrictions related to ownership structure and professional licensing. Accounting, engineering, consulting, and marketing firms typically qualify without issue.
For deals that do not fit SBA parameters, buyers use private credit and mezzanine debt. These structures allow for more flexibility in deal terms but typically require higher EBITDA floors and more buyer equity. If you are in a sector with SBA restrictions, the buyer pool narrows. Knowing this before you start the process helps you think clearly about who the right acquirer is, rather than discovering it when your first-choice buyer cannot get their financing done.
If you are thinking about selling in the next two years, start separating your personal revenue from firm revenue today. Document the client service protocols your staff already follows. Identify which members of your team can own client relationships without you in the room. Get three years of clean financials with consistent treatment of owner compensation.
The preparation work you do now translates directly into purchase price. A firm that is demonstrably less dependent on the founder trades at 5x. A firm where the founder is every client's first call trades at 3.5x. That gap is real and it is entirely addressable. The only question is whether you start the work before or after you are sitting in a diligence call explaining why your clients will not follow someone they have never met.
Berkman Woods acquires professional services businesses in Texas and Oklahoma with $1M–$5M in EBITDA. We work alongside owners who are planning ahead and owners who are ready to move now. If you want a direct conversation about what your firm is worth, reach out.
Related: Professional Services · For Business Owners
