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Buying and selling fees

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Published: 01 Oct 2016 Updated: 27 Nov 2023 Update History

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Technical helpsheet to help ICAEW members in practice to identify various issues in connection with the purchase or sale of a block of fees of a practice.


This helpsheet has been issued by ICAEW’s Ethics Advisory Service to help ICAEW members in practice to identify various issues in connection with the purchase or sale of a block of fees of a practice.

Members may also wish to refer to the following related helpsheets and guidance:


The purchase of fees is a common term for the purchase of an interest in an accountancy practice. Accountancy services are often provided to clients of an accountancy practice on a regular or recurring basis. The introduction and recommendation to those clients of an alternative source of supply has a value to the person, business or practice being recommended. A payment to the practitioner or principal who will no longer supply the service (the seller) by the person receiving the introduction and recommendation (the buyer) is a sale and purchase of goodwill.

This helpsheet has been produced in connection with the purchase of an interest in an accountancy business providing accountancy services to clients. It is not intended to relate to the purchase of any other type of business.

This information is primarily in connection with the purchase of a block of fees rather than other similar transactions in the interests of accountancy businesses such as the merger of two existing practices or the admission or retirement of a principal of such a business. A practice admitting a principal or the retirement of a principal is similar to the purchase or sale of fees although normally expressed as the purchase or sale of a percentage of the equity or goodwill. Many of the issues will be the same as those detailed below although there will be other specific issues to be considered.

Identifying sale or purchase opportunities

There are a number of ways to locate potential buyers or sellers of a block of fees:

  • Personal contact and knowledge
  • Direct approach
  • Advertising
  • Agents

In all cases members need to ensure that they and any agents they work with also apply the fundamental principles of the ICAEW Code of Ethics.

A right to an introduction

Purchasing fees is not actually buying clients – clients have the right to choose their accountants. What is being bought is a right to an introduction and recommendation, and the chance to sell a service to specific clients including information about the client and the services that they may require. The clients' rights, interests and wishes need to be taken into account and appropriate measures taken to safeguard client confidentiality as outlined in section 114 of the ICAEW Code of Ethics. In most respects the clients’ consent will need to be obtained. Members will also need to have regard to the Data Protection Act 2018 and the UK General Data Protection Regulation (GDPR).


The goodwill or value of a block of clients is often based on the fees or profits they can generate. Bases usually start from the fees or profits that can be generated from the current services supplied to the clients and then apply a multiple to them to obtain the value.

Basis of the calculation

The following, non-exhaustive list, may be used as a starting point of the calculation:

  • Gross recurring fees
  • Turnover
  • Future fee income
  • Profitability

If multiples are used within the calculation, they will depend on a wide range of factors – there is no one ‘correct’ multiple to be used, it will be for the buyer and seller to determine. Additional considerations may however include:

  • Equipment
  • Premises
  • Staff and
  • Work in progress

Due diligence

For a deal to be successful the 'fit' of the fees with the buyer will need to be established. At the outset of negotiations often all that is available is a total fee figure and details of numbers of clients in certain fee brackets with an indication of the services provided and the location of the clients. Far more detail needs to be obtained during the negotiation phase. How this information is obtained varies but at some stage the buyer would expect to see client files, accounts, fee notes etc. and where staff are involved, meet with and talk to them.

The seller will need to ensure that the fundamental principle of confidentiality as discussed in section 114 of the ICAEW Code of Ethics is adhered to and the authority of the client would usually be required prior to disclosing client confidential information. It is normal before detailed information is disclosed that a confidentiality and non-poaching agreement is formally documented between buyer and seller. Such an agreement should also include a 'hold-harmless' clause whereby the buyer agrees not to use any information obtained against the interests of the seller.

The following are some of the matters to be considered when undertaking due diligence information gathering:

  • Confirmation of information and detail
  • Fee levels and charging structure
  • Quality of work and files
  • Profitability and overheads

A period of working together, alongside each other or in cooperation or collaboration could be agreed. The arrangements can vary considerably and will be particular to each individual’s circumstances. The arrangements should be able to be terminated without either party suffering substantial loss.

Terms of the sale/purchase

Once the sale/purchase price or a formula for arriving at the price has been determined, the terms of the transaction need to be negotiated. Some of the terms agreed may affect the price formula or multiple. Once the final agreement has been reached then a formal legally binding agreement should be signed and for this reason legal advice should be sought.

Payment period and frequency of instalments

The period over which the purchase price is to be paid and the frequency of instalments could vary between all being paid immediately to instalments over a number of years. Payment over a period can be considered as a loan and interest on that loan may be expected or reflected in an increase in the purchase price. Personal circumstances and the parties respective tax positions can influence the arrangements.


Access to the experience and client knowledge of the seller and other information they can provide following the transaction will be important. Introduction of the purchaser to the clients will involve some time or commitment from the seller. The involvement of the seller will need to be negotiated and payment terms agreed. The involvement of the seller may be for a fixed term or number of hours or as many or as few hours as the purchaser requires. Payment may be part of the purchase price, a fixed sum or variable according to input or a combination of both.

Subsequent conduct of the vendor

While the involvement of the seller may be necessary or desirable, too much involvement may not be. The agreement should address the buyer’s right to determine the amount of involvement and to reduce or curtail it if necessary. It should also address a proper introduction, hand over and assumption of responsibility for the fees by the buyer. A seller continuing to use the resources of the practice (secretarial, equipment, staff and consumables) especially where this is for personal or charitable purposes, can cause difficulties.

The subsequent intentions of the seller such as continuing to practice in the same or another area or continuing to act for some clients will need to be addressed. The agreement needs to address what the seller will or will not do in respect of subsequently acting for the clients sold and may need to include a formula for compensation to be paid to the buyer if clients return to the seller.

Clawback and subsequent loss of the fees

A subsequent reduction in the amount payable should clients be lost or if the fees generated are lower than expected is known as 'clawback'. Clawback can avoid payment for something that does not materialise or exist and create interest by the seller in making an effort to ensure success. A limit to the maximum amount of the clawback should be agreed.


The administration of a sale or purchase of fees can be complex. The following non-exhaustive list is designed to highlight key considerations.

Firm name

It is often perceived that continuing to use or refer to the firm name of the seller can enhance the success of the deal although this will depend on specific circumstances. The seller’s agreement must be obtained in order to continue to use the name. There are a number of different common methods of using the name:

  • The buyer continuing to use the seller’s practice name
  • The new practice name incorporates part or all of the seller’s name
  • The previous firm name is used as a trading name
  • Reference is made to 'incorporating', 'formerly' or 'in association with' on correspondence.

Further guidance on letterheads is available in the helpsheet Practice names and letterheads (for practising members).

Advising the clients and converting them

The clients must be informed that a new person or persons are conducting or taking responsibility for the services received. It is the right of all clients to choose their accountant as highlighted in section 320 of the ICAEW Code of Ethics. The change cannot be imposed on them and they have to agree to it. It is therefore important that before any work is done by the buyer that the client is informed and has consented. In addition formal resignation and appointment procedures may need to be followed (particularly in respect of audit appointments, ATOL reporting and possibly with regard to other regulated work such as insolvency appointments, reserved probate work). New engagement letters should be obtained.

Correspondence should be positive and encouraging, include a strong recommendation from the seller and emphasise advantages for the client where possible. The new services need to be sold and this should be used as one opportunity to do this. Correspondence may be sufficient but telephone calls, meetings and formal introductions may be more appropriate for some clients. The active participation by the seller in the introduction and conversion process will be important to the success of the purchase.

Client files

Access to the client files will be necessary. Ownership and access in the event of a claim needs to remain with the seller (although the purchaser might have temporary custody). A ‘hold harmless’ agreement in respect of the contents would be normal.

The files contain confidential information in respect of the clients and are subject to client confidentiality as outlined in section 114 of the ICAEW Code of Ethics. The client’s consent to giving the buyer access to the files should be obtained.

Furthermore both the buyer and seller will need a lawful basis for processing any personal data contained within the client files in this way. In many cases legitimate interests would be the appropriate lawful basis, that is the legitimate interests of seller to sell their business and the legitimate interests of the buyer to expand their business (though consent may also be appropriate in the case of a client who is themselves the data subject). Firms may already make reference to buying or selling the business in their existing privacy notice, although where this is not the case they should take reasonable steps to inform data subjects of the change. Further details can be found in the helpsheets GDPR – Lawful basis for processing and GDPR – Rights of an individual.

Anti-money laundering customer due diligence

It is the responsibility of each firm to undertake its own anti-money laundering customer due diligence. However, the purchaser may rely on the anti-money laundering client due diligence of the seller if the seller is willing to provide written consent to the purchasers request for reliance. The procedures in paragraphs 5.3.25 to 5.3.31 of the CCAB Anti-money laundering guidance for the accountancy sector should be followed and the purchaser will remain responsible for undertaking on-going customer due diligence going forward.

Professional indemnity insurance (PII) and run off cover

The seller, if a member, is required by ICAEW to have a minimum of 24 months professional indemnity insurance run off cover in respect of the work done for the clients prior to the sale. Further guidance can be found on the Professional indemnity insurance webpage. The purchaser would be advised not to assume any liability for work undertaken prior to the sale.

If in doubt seek advice

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Technical Advisory Service on +44 (0)1908 248 250 or via webchat.

Terms and conditions

© ICAEW 2023  All rights reserved.

ICAEW cannot accept responsibility for any person acting or refraining to act as a result of any material contained in this helpsheet. This helpsheet is designed to alert members to an important issue of general application. It is not intended to be a definitive statement covering all aspects but is a brief comment on a specific point.

ICAEW members have permission to use and reproduce this helpsheet on the following conditions:

  • This permission is strictly limited to ICAEW members only who are using the helpsheet for guidance only.
  • The helpsheet is to be reproduced for personal, non-commercial use only and is not for re-distribution.

For further details members are invited to telephone the Technical Advisory Service T +44 (0)1908 248250. The Technical Advisory Service comprises the technical enquiries, ethics advice, anti-money laundering and fraud helplines. For further details visit icaew.com/tas.

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Changelog Anchor
  • Update History
    01 Oct 2016 (12: 00 AM BST)
    First published
    05 Jan 2021 (12: 00 AM GMT)
    Changelog created, helpsheet converted to new template
    05 Jan 2021 (12: 00 AM GMT)
    Minor edits relating to Brexit / updated regulations. Links updated.
    27 Nov 2023 (12: 00 AM GMT)
    Updated links to point to new version of CCAB guidance, other links updated. Content has not had a full technical review. (Change requested by STA, completed by WA)