In today’s accounting practice acquisition market, the pathway to ownership is increasingly shaped not only by valuation or deal terms but by access to finance — and specifically, how banks are assessing risk in these transactions.
Whether you're looking to buy a fee base as a sole practitioner or step into equity as a new partner in an established firm, your funding journey will be markedly different depending on your chosen path. At the heart of this is bank policy — particularly how Australian lenders are treating the loan-to-value ratio (LVR) across different deal structures.
Divergent Lending Policies
Right now, we’re seeing a sharp distinction in how banks are approaching two common acquisition scenarios:
Sole Practitioner Buyers – where the buyer is acquiring a fee base or small practice outright.
Incoming Partners – where an individual is buying into an existing multi-partner firm.
For the sole practitioner, many Australian banks are capping LVRs at around 50%. That means if you're purchasing a $1 million fee base, you’ll need to have at least $500,000 in equity — either in cash or other acceptable collateral. For many capable practitioners, that’s a high barrier to entry, particularly if they’re in the early to mid stages of their career.
In contrast, when a new partner is being admitted into an established firm, banks are frequently offering LVRs of up to 100%, depending on the strength of the firm and the projected earnings of the incoming partner. In some cases, lending is structured as a blend of secured and unsecured funding, with generous terms and repayment flexibility.
Why the Gap?
As Matt Todman CA, Director of Three Story Capital — a specialist in funding for professional services firms — explains, "Banks remain highly supportive of the accounting sector. They continue to see recurring fee revenue as a secure asset class, and are willing to tailor finance around predictable cash flows and well-governed business models."
However, that support is increasingly conditional.
Where the acquisition is part of an internal succession plan, or where the incoming equity partner is joining an already well-performing firm, banks view the risk as low. There is continuity of business operations, a proven profit history, and strong internal governance. Many of these firms also have financial disciplines and partner agreements that align well with bank risk frameworks.
In contrast, sole practitioners acquiring a book of fees — particularly from outside the business — are seen as carrying higher operational and business continuity risk. Even where the recurring revenue is strong, the bank is looking at whether the buyer has the scale, resources, and systems to retain and grow that revenue post-acquisition.
The Practical Impact on Buyers
This lending dynamic is reshaping the goals and behaviour of many professionals seeking ownership.
1. Solo Buyers Facing Friction
For those looking to acquire fees as an independent owner — especially in the $500,000 to $2 million range — finance is becoming harder to secure, or only available on materially less favourable terms. Some banks are requiring not just lower LVRs, but also full-serviceability assessments, personal guarantees, and security beyond the business asset itself.
The result? Many talented accountants who might have once aimed to buy their own practice outright are now reassessing whether that’s the most efficient path to equity.
2. Partner Entry Becoming a Preferred Model
Meanwhile, established firms — particularly those planning for succession — are being encouraged to facilitate equity pathways for new partners. The combination of favourable bank support and strong recurring revenue makes these deals easier to fund.
For the incoming partner, this presents a far smoother entry into ownership. Instead of raising hundreds of thousands of dollars upfront, they may be able to fund their buy-in entirely through structured finance supported by the firm’s performance and their future income stream.
This is particularly compelling for high-performing senior managers or directors in mid-tier firms. In the right structure, they can step into a meaningful equity position without needing to disrupt their career path or take on personal risk that would be required to go solo.
3. Firms Leveraging Lending Support to Drive Growth
Firms that understand this lending landscape are also using it to their strategic advantage. With access to bank finance at partner level, firms can:
Offer structured buy-ins to secure long-term talent
Facilitate the exit of senior partners via internal succession
Fund the acquisition of external fee bases with greater leverage
These capabilities are giving multi-partner firms a significant edge in the current market — both in talent retention and in executing growth strategies.
What It Means for the Industry
These lending trends are more than just a finance issue — they are subtly but powerfully influencing the evolution of firm ownership models in Australia.
Sole traders and fee base acquirers are facing steeper challenges, potentially narrowing the pool of future standalone practice owners. In contrast, equity partnerships — often previously seen as the slower or more politically fraught pathway — are now emerging as the more bankable and accessible option for many professionals.
Banks are effectively nudging the industry toward consolidation and professionalisation, favouring larger, more stable structures over fragmented solo practices. While this may have some downsides for individual autonomy, it aligns with long-term trends toward higher compliance, scale efficiency, and improved client servicing capabilities.
Final Thoughts
If you’re planning to acquire a practice or step into equity in the near future, it’s crucial to understand how the funding landscape could affect your options.
For sole practitioners, it may mean rethinking the deal size, structure, or even partnering with others to strengthen the lending proposition. For firms preparing to admit new partners, now is an opportune time to engage with a specialist broker or adviser who understands how to structure deals in line with bank expectations.
And for the next generation of firm leaders, the path to ownership may be less about going it alone and more about aligning yourself with the right firm — one that offers a pathway, a plan, and access to the kind of bank support that can make ownership a reality much sooner than expected.
Need Guidance?
If you’re exploring acquisition opportunities, consdering partnership roles or planning to admit new equity partners, our team at Practice Exchange is well-versed in working with brokers and lenders to structure deals that are not just feasible — but attractive to both parties.
For help navigating your options, please contact me directly. You can schedule a call with me via Calendly or contact me at 1300 722 452 or mark@practiceexchange.com.au. Visit Practice Exchange Listings today to learn more.
