By Steven Fine, Managing Director – Growth Focus M&A

In the realm of professional services M&A, valuation is often portrayed as a science of clear equations and well-trodden benchmarks. Yet, for those of us immersed in the day-to-day of financial planning practice sales, we know the truth is far more complex — and far more interesting.

Over the past 17 years, our firm has advised on hundreds of transactions across Australia. Along the way, we began noticing something important: too many assumptions about value were based on hearsay, outdated models, or simply the loudest voices in the room.

The prevailing market wisdom — rules of thumb about multiples of recurring revenue, tales of “what someone else got” at a barbecue, or surface-level comparisons — rarely stood up to scrutiny when examined against the outcomes of real deals.

We decided to go deeper.

What started as a curiosity evolved into a multi-year research project, fuelled by direct, live data from active market participants. We built a platform to capture buyer preferences in real time, transaction by transaction, allowing us to move beyond theory and into genuine market insight.

What the data revealed has been nothing short of fascinating.

The Problem with Traditional Valuation Methods – The Market Approach

The most common approach — the “market approach” — borrows from real estate: look at recent comparable sales, then apply the same multiples. It sounds logical, but there’s a flaw.

Unlike property, where details are transparent and public, financial planning businesses remain largely opaque. You might hear a headline sale price, but not the crucial context: client demographics, revenue spread, owner dependency, compliance history, or the true underlying profitability.

And even if you do get the details, the sample size is thin. The pool of comparable transactions in any given year is small, and outliers — such as premium strategic deals in tightly contested markets — can easily skew perceptions.

What’s more, practice buyers aren’t passive observers of market reports. They’re active, living participants with their own shifting priorities, biases, and strategies.

The result? Valuations built on old models often miss the mark. To truly understand what drives value, you have to look at what’s influencing real buyers, right now.

Moving Beyond Guesswork: A Data-Led Approach

To address this gap, we’ve spent years collecting live data directly from buyers at the point of transaction — not as a survey afterthought, but as an integrated part of every conversation and negotiation.

What emerged is a data set not of opinions or hypotheticals, but of actual buyer-weighted insights, showing exactly how different factors influence decision-making and perceived value.

Through this process, we identified nine core value drivers, each containing multiple sub-factors that carry weight in the eyes of acquirers:

• Services 
• Staff 
• Clients 
• Compliance
• Financials 
• Growth
• Systems and technology
• Location and portability
• Owner reliance

However, it’s not simply a matter of knowing how buyers view each driver in isolation. It’s the weight they place on the underlying factors — and the way those factors interact within each driver — that reveals a far richer and more complex picture. And it’s here that the real surprises begin to emerge.

Surprising Insights: What Moves the Needle (It’s Not What You Think)

Through years of data capture and live buyer analysis, we’ve uncovered patterns that challenge many of the familiar assumptions about practice valuation.

Some factors traditionally thought to be crucial play a much smaller role than expected. Others, often overlooked, carry surprising weight in buyer decision-making.

Take pricing strategies. It’s not as straightforward as raising fees or keeping them competitive — buyer attitudes are more complex than that, and opinions remain split in intriguing ways.

Or internal systems. Many owners pour effort into operational perfection, only to discover that buyer priorities don’t always align with these investments. Our data reveals why.

Even growth history, widely regarded as a hallmark of business quality, yields unexpected results in the valuation conversation — especially when you see it through the lens of active market buyers.

The reality is, what seems obvious is often misleading. The data tells a more nuanced story, and we’ve spent years collecting it, transaction by transaction, insight by insight.

The data continues to reveal more than meets the eye — and for those curious enough to explore, the findings are as surprising as they are valuable.

Optimising Value: Focus Where It Matters

One of the most powerful outcomes of this data-led approach is the ability to map where improvements in a practice will genuinely drive value — and where further effort might be wasted.

We call this concept the Overscore. Simply put, every value driver has a ceiling. Once you reach it, additional improvement offers no incremental value uplift. It’s an insight that has saved practice owners countless hours (and dollars) of well-intentioned but ultimately unnecessary pre-sale investment.

For owners contemplating a sale in the next one, three, or even five years, understanding their position across these value drivers is a strategic advantage. Rather than investing blindly, they can prioritise improvements in areas that buyers genuinely care about — and avoid overspending in areas where they don’t.

Closing Thoughts

For too long, practice valuations have relied on assumptions and incomplete data. But the market has matured, and the tools now exist to understand — with much greater clarity — what actually drives value.

It’s a complex, evolving picture. Buyer preferences continue to shift, influenced by regulation, market dynamics, and economic conditions. But one thing remains constant: deeper insights always lead to better outcomes.

And while the full story sits beneath the surface of this article, the good news is the data keeps flowing, and with it, a clearer view of the levers that matter most.