Licensing regime to devalue accounting firms
Accounting firms that have not prepared for the end of the accountant’s exemption but that plan to sell should be aware their practice may see a significant decline in value, warns the principal of a boutique advice firm.
Principal at Paramount Wealth Management, Wayne Leggett, said if an accounting firm has not taken steps to prepare for the licensing regime – and many services that are currently provided to clients will require a limited licence or authorisation under another licence – then this will have a clear impact on the valuation of the business.
“If, historically, the business has worked close to the line, particularly in regards with SMSF advice, for example, if a lot of the work is going to be taken off the table legislatively because they don’t have the appropriate qualifications in place, then this may undermine some of the business valuation multiples that would have otherwise applied,” he said.
Mr Leggett said the regulatory regime in general is having an impact on what practitioners can do and how they are paid.
“That puts a bit of a question mark over business valuations into the future,” he said.
“People are looking more closely at how your business is structured, what sort of agreements you have with your clients and how they pay you, how sustainable that revenue is, and what sort of services you are able to provide and charge for.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.