BOOK REVIEW: VALUING ACCOUNTING PRACTICES

By Robert F. Reilly and Robert P. Schweihs

Published by John Wiley & Sons, Inc. $85

Reviewed by Michael Goldstein,
The CPA Journal

Why would you want to know how to value an accounting practice? In addition to the usual reasons related to transaction pricing and structuring, succession planning, litigation (particularly matrimonial), and taxation, this book can be very useful if you would want to improve your skills as a professional appraiser of accounting firms. While the book may be helpful for valuing regional and national accounting firms, most of the illustrative examples relate to small (i.e., one-to-ten partner accounting firms).

If you are looking for someone to give you the right valuation pricing multiples for your firm, you will have to look elsewhere. The authors, however, do tell you how to develop such a base and where you can obtain operating statistics. The book has been written for professional valuation analysts. It covers three specific valuation methods as they apply to accounting firms: market-, income-, and asset-based, and how to reconcile the different value estimates into the one value--how much an accounting practice will bring. But in the words of the authors: "This is not a cookbook; that is, we do not provide a step-by-step template that would enable a novice to perform a thorough accounting practice valuation." Having noted this, I still believe that the book does provide guidance for the one-time user who wants to develop a better idea of what his, her, or their practice will bring, in total or in part.

The authors provide several interesting bibliographies, not the least of which is the Accounting Practice Valuation Bibliography. Regarding that same bibliography, I noted with interest that very little has been written since 1990. The authors also dispense some humor in their choice of names for their sample evaluation studies. *