A longer version of our LinkedIn post from October 6, 2026. See the original post.
One hard truth firm owners hear in diligence is that a lot of the firm's value may not belong to the firm at all.
At many smaller firms, the goodwill sits with one or two partners. Clients call their cell phones, staff take direction from them, every big decision runs through them, and anyone looking at the firm from the outside sees that right away and prices it in. The question they are really asking is simple: if those partners step back, how much of the book follows them out the door?
Personal goodwill is fragile goodwill
None of this means the partners are doing anything wrong. Most firms grow exactly this way, because the founders were the ones who won the clients and kept them happy for years. The trouble is that the same strength becomes a weak spot later, since value that lives in a partner's relationships can walk out with that partner.
The fix isn't making the partners less important, it's making the firm matter as much as they do.
A few places to start
- Put a second person in the room on your biggest relationships, years before anyone retires. Clients get comfortable with someone new slowly, and that comfort is what carries over.
- Let clients get answers from the team, not only from a partner. When a client's question can only be answered by one person, the relationship belongs to that person.
- Write down how the firm does its best work, so quality doesn't live in a partner's headspace. Review steps, planning checklists and the way you handle a tough conversation can all be written down and taught.
- Make sure clients think of the firm's name before they think of yours. The brand on the engagement letter, the emails and the planning meetings should be the firm's.
Why the timing matters
None of this happens in the year you decide to sell. It takes years of small habits, and the firms that start early get a stronger valuation and a smoother handoff, whoever ends up on the other side of the table. It also makes the firm a better place to work in the meantime, because the people on the team get real responsibility and real relationships of their own.
Where the Alliance fits
This is a big reason Linked Accounting Alliance exists. Member firms share specialists, technology and process, which helps each firm build value that doesn't depend on any one partner. A shared tax specialist in the room, a planning process that every relationship manager runs the same way and a back office that keeps working when someone is out all move goodwill from a person to the firm.
If you are thinking about how much of your firm's value really belongs to the firm, we would be glad to talk it through.
Frequently asked questions
What is personal goodwill in an accounting firm?
It is the part of a firm's value that is tied to a specific partner rather than to the firm: the client relationships, trust and know-how that would leave if that partner did. The part that stays with the firm's name, team and process is the firm's own goodwill.
Why does personal goodwill lower a firm's value?
Anyone looking at the firm has to ask how much of the book would follow the partners out the door. That is why independent firms often carry an owner-dependency discount when they are valued.
How long does it take to move goodwill to the firm?
Years, not months. Clients get comfortable with new people slowly, so the habits above work best when they start well before anyone plans to step back.
