Private equity has fundamentally reshaped the CPA marketplace. PE-backed platforms now compete head-to-head with national legacy firms, regional acquirers and even smaller local buyers — driving multiples up, accelerating deal pace, and introducing entirely new deal structures.
The presentation below summarizes the data, benchmarks and structures behind today's market. It is based on Cindy Ragan's keynote to the Florida Institute of Certified Public Accountants (FICPA).
Profit Margin Benchmarks — PE Firms
What PE buyers expect.
PE-backed acquirers target firms with strong, defensible margins, recurring revenue, and operational discipline. The bar is higher than the legacy market — but the multiples reflect that.
Target EBITDA Margin
≥ 30%
Recurring Revenue
65%+ preferred
Typical Multiple
8–12× EBITDA
Higher Profit Margins
The 40%+ tier.
Higher performing firms — those with margins exceeding 40%, especially firms with strong advisory services and technology leverage.
Profit Margin Benchmarks — Legacy Firms
Where legacy firms typically sit.
Traditional CPA firms — partnership-driven, tax-heavy, with limited advisory penetration — generally show lower margins and different valuation characteristics, often priced on revenue rather than EBITDA.
Typical EBITDA Margin
15–25%
Common Multiple
1.0–1.5× revenue
Recurring Revenue
Variable
Transaction Structures
How modern PE deals are structured.
Cash at Close
Typically 60–80% of total consideration, depending on profile.
Rollover Equity
Sellers retain meaningful equity in the PE platform — alignment with future growth.
Earn-Outs
Performance-based payments tied to revenue / EBITDA over 1–3 year windows.
Seller Notes
Bridge financing from seller, often subordinated, with defined interest and term.
Employment & Consulting
Continuing roles for owners, with compensation tied to integration milestones.
Non-Competes
Geographic and time-bound restrictions tailored to the firm's market.