Niche accounting practices can be exceptionally smart purchases for those looking to invest in a lean and profitable practice. Below, we explain the key factors to consider when buying a niche accounting practice, from the type of industry niche to its value.
Why Buy a Niche Accounting Practice
There are a few significant reasons to consider buying a niche accounting practice. For one, a niche practice means you have a more streamlined and efficient business model as it provides similar services to similar clients. A niche accounting practice can better provide the best niche service to its clients.
A specialty practice is also easier to market and sell. The more it operates within the niche, the better it can create targeted marketing campaigns. And by buying an existing practice, the foundation for the practice’s success is already there.
Transformation vs. Industry Niche
Two main delineations exist for a niche accounting practice: an industry or a transformation niche. An industry niche is specific to one industry—like all their clients are restaurants or grocery stores.
A transformation niche is specific to a service the practice provides. For example, a transformation accounting niche may specialize in tax planning or wealth management, so while the niche practice’s clients may all come from different industries, the accounting practice provides the same service to those clients.
What Types of Industry Niche Accounting Practice
When buying an industry niche accounting practice, the type of industry is a key factor to consider. You don’t want to buy into a small industry niche or one in decline, as that’s the industry you’ll attach your private practice to.
Regional market and environmental conditions will naturally affect local industries. For example, you don’t want to buy a real estate industry niche accounting practice if there’s little to no real estate investment in the surrounding area. Other examples of industry niches to consider include:
- Software startups
- E-commerce business
- Construction
- Non-profits
- Fitness centers
- Foodservice
- Cannabis
How To Value a Niche Practice
When searching for a niche practice to buy, you’ll have to know how to value such a practice. While there are many factors to consider, the most significant are still the fundamentals: the size of the firm, its location, its profitability, and its marketing.
The terms of the sale will also be a significant factor, like how much they want as a down payment or cash at closing. If you need help valuing a niche accounting practice, Private Practice Transitions’ business appraisal services can help!
Our team of Certified Business Intermediaries (CBI) can perform a broker’s Opinion of Value that uses a variety of factors to create a sensible valuation with factors like SDE, EBITDA, and more. Contact our staff if you’d like a business valuation or help finding a niche accounting practice today.
