When buyers assess an accounting practice, they are ultimately underwriting continuity. While systems, staff and infrastructure matter, the real determinant of value is the security and transferability of client relationships. This article explores how buyers think about goodwill, why early relationship transfer strengthens value without signalling exit, and how well-run firms can preserve optionality by focusing on continuity rather than perfection.
In discussions about practice value, attention naturally gravitates toward what can be seen, measured and improved. Software systems, staffing structures, technology platforms and process maturity tend to dominate the conversation — and for good reason. Well-run accounting firms invest heavily in these areas over time, often at considerable cost, precisely because they underpin service quality and scalability.
Yet when buyers assess an accounting practice — whether through a merger, partial sell-down or full acquisition — their focus tends to move quickly beyond surface polish. The central question is rarely how complete the infrastructure looks on day one. It is far more fundamental: how secure is the goodwill, and how confidently can it be transferred?
For established practices with long-standing client bases, this distinction matters. Most vendors already operate high-quality firms. The difference between a sound outcome and an exceptional one is rarely determined by what has been built, but by how robust and transferable the firm’s core relationships have become.
How buyers actually think about goodwill
From a buyer’s perspective, goodwill is not a backward-looking multiple applied to history. It is a judgement applied to the future.
More precisely, it is an assessment of the likelihood that client relationships — and the cash flows attached to them — will persist through change. That change may involve new ownership, new partners, different service teams or a broader firm platform. In many cases, it involves a combination of all three.
The buyer’s task is not to confirm that a firm is profitable today. It is to determine whether those profits are likely to endure when the firm’s structure, leadership or ownership inevitably evolves.
The greater the confidence that client relationships will survive that evolution, the more resilient the goodwill becomes. Transferability is what underwrites that confidence.
Why transferability outweighs polish
Sophisticated buyers generally assume that most firms can refine processes, upgrade software and improve systems over time. These elements matter, but they are rarely viewed as binary hurdles. What cannot be retrofitted easily is trust.
Client relationships in professional firms are built over years, often decades. They are shaped by judgement, accessibility, shared history and personal credibility. Buyers understand that these relationships do not automatically migrate to new structures, even where the firm name and service offering remain unchanged.
As a result, buyers place less emphasis on whether everything appears “finished” and more emphasis on whether the firm demonstrates credible signals that relationships are capable of surviving transition.
Those signals are rarely explicit. They are observed.
They include the depth of client relationships beyond a single principal, the way work is introduced and reviewed, the stability of the service team, and the extent to which clients already experience continuity rather than reliance on one individual.
None of this requires a principal to step back. In fact, it is usually most effective when principals remain actively involved.
Infrastructure in its proper context
This is not an argument against infrastructure. Strong systems, capable staff, outsourcing capability, compliance frameworks and technology all matter — often significantly.
However, their value lies primarily in what they enable.
Infrastructure supports transferability by providing consistency of delivery, reducing execution risk, and allowing relationships to be supported by a broader platform rather than a single individual. It allows continuity to be demonstrated in practice, not just promised in principle.
Seen this way, infrastructure is best understood as support architecture rather than the asset itself. It strengthens goodwill by making transfer possible, not by replacing relationships.
Managing relationship depth, not diffusing it
An important nuance often overlooked in discussions about transferability is that spreading relationships indiscriminately is not the objective.
Buyers are not looking for client relationships to drift toward loosely connected teams or individuals without appropriate structure, accountability or restraint. Particularly in the Australian context, where employment restraints are often narrow and carefully scrutinised, unmanaged relationship transfer can introduce its own form of risk.
What buyers respond to is not diffusion, but managed depth.
That typically means relationships are supported by identifiable teams, clear governance, appropriate employment arrangements and well-defined client ownership — all while the principal remains clearly connected and visible. Transferability is strengthened through structure, not informality.
Timing without implying exit
One of the more persistent misconceptions within the profession is that attention to transferability delays or complicates a sale. In practice, it tends to do the opposite.
Buyers consistently place the highest value on transactions where principals remain engaged, visible and committed after a transaction, particularly during the period in which goodwill is being transferred. Early work on relationship transfer strengthens buyer confidence at the point of sale, supports pricing, and reduces the need for more aggressive retention mechanisms.
Handled properly, this approach allows vendors to monetise value while remaining involved in the business for an agreed period. Risk is reduced progressively rather than abruptly, clients experience continuity rather than disruption, and buyers gain confidence that the goodwill they are acquiring is secure.
Crucially, this does not require an indefinite or open-ended transition. It supports clear transaction structures — whether merger, partial sell-down or full sale — by improving outcomes at the time capital is actually realised.
What buyers notice early
Buyers rarely need long to form a view. Before detailed diligence begins, they are already observing where relationships sit, how work flows through the firm, and how clients respond when something changes — a staff move, a system upgrade, or a shift in who leads an engagement.
Firms where relationships are clearly supported by structure, boundaries and continuity tend to inspire confidence quickly. Where relationships appear informal, overly concentrated or loosely managed, perceived risk rises just as quickly — regardless of reported profitability or how polished the systems appear.
That early impression often shapes everything that follows.
A clearer reframing
For many practice owners, the most useful reframing is this:
Early attention to transferability is not about leaving sooner.
It is about staying involved longer, with less concentrated risk.
Seen this way, relationship transfer becomes a way of strengthening the firm while the principal remains active, visible and valued — not a signal of withdrawal, but of confidence.
In a market where accounting practices remain in demand, the strongest outcomes tend to accrue to vendors who understand that goodwill security is not created at the point of sale. It is accumulated gradually, through continuity, structure and trust.
Everything else — systems, processes and scale — exists to support that objective.
