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The plain-English meanings of the terms a UK accountancy practice principal will encounter when reading the rest of this site, exploring an exit, or reviewing a heads of terms or SPA. Where there is a Jack Ross-specific position on a term (retention test, payment structure), it is stated.
Quick jump
AAT ·
ACCA ·
Adjusted ebitda ·
Anti embarrassment ·
Asset sale ·
BADR ·
Broker ·
Capital gains tax ·
Clawback ·
Completion ·
Completion accounts ·
Concentration risk ·
Corporation tax ·
Deferred consideration ·
Disclosure letter ·
Due diligence ·
Earn out ·
EBITDA ·
Equity rollover ·
Exclusivity ·
Fee book ·
Goodwill ·
GRF ·
Heads of terms ·
ICAEW ·
Indemnity ·
Indicative valuation ·
Locked box ·
MAC ·
MBO ·
MVL ·
NDA ·
Non compete ·
Non solicitation ·
PE consolidator ·
Pension allowance ·
Recurring fees ·
Restrictive covenant ·
Retention test ·
Share sale ·
SPA ·
TSA ·
TUPE ·
Vendor loan ·
Warranty ·
Working capital ·
Working papers
AAT
Association of Accounting Technicians. The UK professional body for accounting technicians. Members hold the MAAT designation and operate under AAT's code of professional ethics.
ACCA
Association of Chartered Certified Accountants. A UK-based global professional body for accountants. Members hold the ACCA designation and operate under ACCA's professional and ethical standards.
Adjusted EBITDA
EBITDA after add-backs for owner-manager remuneration above market rate, discretionary spending (entertainment, vehicles, owner pension contributions above market), and non-recurring expenses (one-off legal fees, IT rebuilds). The metric a buyer actually uses to value mid-to-large practices on the EBITDA method. See EBITDA.
Anti-embarrassment clause
A clause requiring the seller to share in any uplift if the buyer resells the practice within a defined period (typically 24 months) at a materially higher multiple. Protects the seller from a buyer who acquires cheaply then flips for a quick profit. Negotiable on direct chartered-firm deals; standard on PE-backed transactions.
Asset sale
A deal structure where the buyer acquires the goodwill, work-in-progress, fixed assets, and (usually) employment contracts of the practice, but not the seller's company. The seller's company retains its corporate identity, settles outstanding obligations, and distributes the proceeds to shareholders over time. Buyers typically prefer asset sale because they can pick what they take and step up the goodwill base for tax-amortisation purposes. Sellers usually prefer share sale because of the cleaner CGT treatment with BADR. The negotiated outcome is often a compromise. See /deal-structure/.
BADR (Business Asset Disposal Relief)
A reduced capital gains tax rate available on qualifying disposals of business interests, up to a £1m lifetime limit. The rate is 18 per cent for disposals on or after 6 April 2026; it was 14 per cent in the year before that, and 10 per cent up to 5 April 2025. Qualifying conditions include a 5 per cent shareholding for at least 24 months, employee or office-holder status throughout, and the company being a trading company. For a sole-principal practice owned through a limited company with a clean trading history, the path to BADR is normally straightforward. Worth checking eligibility two years before sale rather than at the sale itself. See /tax-structuring-practice-sale-uk/.
Broker
An intermediary firm introducing accountancy-practice sellers to potential buyers, typically in exchange for a percentage commission on completion (industry standard 3-5 per cent of gross recurring fees, paid by the seller). UK examples include Foulger Underwood, Vivian Sram, Robertson Hare, Kingsman, and Evolve. Brokers can be the right route for specific situations (very large books that need many bidders, sellers who genuinely cannot lead the conversation themselves) but for most sole-principal and small-firm sales the broker fee plus the longer sale timeline materially reduces seller proceeds compared with a direct sale to a buyer who is already in scope. See broker route vs direct buyer.
Capital gains tax (CGT)
UK tax on the gain from disposing of an asset. For a practice share sale, the shareholder's gain is taxed at CGT rates: 18 per cent under BADR up to the £1m lifetime limit, 24 per cent above (rates from 6 April 2026, subject to change). For an asset sale, the corporate gain is taxed first at corporation tax, then again on extraction.
Clawback
A contractual right for the buyer to reduce or recover deferred consideration if a defined retention or performance metric is not met. In the Jack Ross structure, clawback applies only against the final 25 per cent tranche if retention falls below 85 per cent at month 24. There is no clawback against the 50 per cent paid on completion or the 25 per cent paid at month 12. See retention test and /deal-structure/.
Completion
The day the deal closes, the SPA is signed, the first payment is made, and ownership transfers. In the Jack Ross 12-week timeline this is week 11. See /transition-timeline/.
Completion accounts
A statement of net assets prepared as at the completion date, used to adjust the headline price for any working capital differences from the assumed level. Less common than locked box mechanisms in small-practice deals, but worth knowing if your buyer's first draft proposes them.
Concentration risk
The proportion of the fee book attributable to a single client. A practice whose biggest client is 25 per cent of fees is materially more fragile than one whose biggest is 8 per cent. Buyers price concentration into the multiple, typically discounting by 0.1x to 0.3x GRF for top-client concentration above 15 per cent.
Corporation tax
UK tax on company profits. Main rate 25 per cent on profits above £250k; 19 per cent on profits below £50k; marginal relief band between (rates as at 2026, subject to change). A factor in asset sale structuring because corporate gains on goodwill are taxed at corporation tax before any extraction.
Deferred consideration
Portions of the purchase price paid after completion. The Jack Ross structure defers 25 per cent to month 12 and 25 per cent to month 24. Both deferred tranches are time-based commitments; only the final 25 per cent is subject to a retention test. Distinct from an earn-out, which is performance-based.
Disclosure letter
A letter from the seller to the buyer at signing, listing exceptions to the warranties in the SPA. Anything disclosed is, by convention, not a warranty breach. Drafted by the seller's solicitor based on a question-by-question review of the warranties.
Due diligence (DD)
The buyer's investigation of the seller's practice across financial, operational, legal, regulatory, and client-list aspects. In the Jack Ross 12-week sequence, DD runs across weeks 5 to 8. We run financial DD internally (no external accountancy fees on our side). Solicitors co-ordinate the data exchange under the NDA. See illustrative acquisition for a worked example.
Earn-out
Deferred consideration tied to future practice performance. PE consolidators typically use 3 to 5-year earn-outs with multiple conditions (retention, EBITDA targets, integration milestones). The Jack Ross structure has no earn-out: the deferred 25 per cent / 25 per cent tranches are time-based with a single retention test on the final tranche, not performance-based. This is the most material commercial difference between the Jack Ross structure and a typical PE consolidator offer.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortisation. A profit metric used in valuation of larger practices, typically £750k+ turnover. Multiple of EBITDA times a multiplier gives an enterprise value: typical accountancy practice EBITDA multipliers are 5x to 7x, varying by recurring proportion, client concentration, and specialism. See /value-your-fees/ for the calculator that handles both GRF and EBITDA methods depending on practice size.
Equity rollover
Where part of the consideration is paid in shares of the acquiring company rather than cash. Common in PE consolidator deals (typical rollover: 20 to 30 per cent); rarely required in direct chartered-firm acquisitions. The seller becomes a minority shareholder in the consolidator group, with the eventual return dependent on the platform's exit valuation.
Exclusivity
A period (typically 30 to 90 days) when the seller cannot speak to other buyers, typically agreed at heads of terms stage and during which due diligence runs. The buyer's incentive shifts at this point, which is why what they say before exclusivity matters more than what they say during. See ten questions before exclusivity.
Fee book
The collection of recurring client engagements a practice operates, expressed as the annualised fee value. The unit of currency in practice sales. Valued via the GRF multiple methodology for smaller practices and via adjusted EBITDA for larger ones.
Goodwill
The intangible value of the practice's client relationships, reputation, and ongoing fee book. Usually the largest component of the deal value in a practice sale; tangible assets (equipment, fixtures) are typically a small fraction. See goodwill versus recurring fees.
GRF (Gross Recurring Fees)
Annual recurring fees from compliance work, monthly bookkeeping retainers, and locked-in advisory retainers. The denominator most commonly used in small-practice valuation. Typical multipliers: 0.8x for problematic books, 1.0x to 1.2x for standard, 1.3x to 1.5x for premium. The Jack Ross structure pays up to 1.5x for the right book. See GRF multiples explained and the calculator.
Heads of Terms (HoT)
A 3 to 5-page document setting out the commercial terms agreed before the SPA is drafted. Usually non-binding except for confidentiality and exclusivity. Covers deal structure, indicative price, exclusivity period, key staff and client commitments, target completion calendar, and the costs each side carries. See reading heads of terms for a clause-by-clause decoder.
ICAEW
Institute of Chartered Accountants in England and Wales. The professional body regulating UK chartered accountants. A practice's ICAEW practising certificate, complaints history, professional indemnity insurance, and most recent practice review are part of due diligence. Jack Ross is ICAEW-regulated.
Indemnity
A pound-for-pound contractual promise by the seller to compensate the buyer for a defined risk (e.g., a pending dispute, a tax exposure). Distinct from a warranty in that the buyer doesn't need to prove loss in the same way. Indemnity exposure is typically capped.
Indicative valuation
A non-binding price range a buyer provides early in the process based on top-line numbers (annual fees, recurring proportion, location, practice type). Refined through due diligence before becoming a firm offer in the heads of terms. The on-page calculator produces an indicative valuation in the same band a buyer would offer for a clean book.
Locked box
A pricing mechanism where the headline price is set as at a defined "locked box date" (often a recent month-end), with the buyer assuming risk for the period between that date and completion. Less common than completion accounts in small-practice deals.
Material adverse change (MAC)
A clause giving either side the right to renegotiate or walk if a defined material event occurs between heads of terms and completion. Typical trigger: loss of a client representing more than 5 per cent of the fee base.
MBO (Management Buy-Out)
A sale to existing staff (often the senior manager, office manager, or a small group of employees) rather than to an external buyer. Common where the founder wants client and staff continuity and a member of staff has the appetite and resources for ownership. Typically funded by a combination of vendor loan and bank lending.
MVL (Members' voluntary liquidation)
A solvent winding-up procedure for a UK limited company. After an asset sale, the seller's company can be liquidated and the cash distributed to the shareholder; capital distributions on liquidation can qualify for BADR if the conditions are met. The standard exit route for a sole-principal company after an asset sale. See /tax-structuring-practice-sale-uk/.
NDA (Non-disclosure agreement)
A mutual confidentiality contract. The Jack Ross mutual NDA is one page, electronically signable, available on request before any substantive conversation. It is not publicly downloadable: ask for it in your first email. See /contact/.
Non-compete
A post-completion restriction on the seller, typically a three-year prohibition on setting up or working for a competing accountancy practice within a defined geographical area (often a 20-mile radius of the office). Standard in practice sales. See restrictive covenant and non-solicitation.
Non-solicitation
A post-completion restriction on the seller approaching the acquired practice's clients or staff for a defined period. The Jack Ross structure: five years for both clients and staff. Distinct from the non-compete, which restricts setting up a competing practice; non-solicitation restricts actively reaching out to specific people. Carve-outs typically allow accepting unsolicited approaches and non-accountancy work.
PE consolidator
A private-equity-backed firm that acquires multiple accountancy practices to roll up into a single platform. Active examples in the UK market include Xeinadin, Azets, Sumer, TC Group, Dains, DJH, AAB, Cooper Parry, and S&W. Distinct in structure from a chartered-firm acquirer (Jack Ross): higher headline multiples but multi-year earn-outs, equity rollover, forced systems migration, year-2/3 cost reviews. See private equity versus trade buyer.
Pension annual allowance
The maximum amount that can be contributed to a UK pension in a tax year with full tax relief. £60,000 as at 2026, with carry-forward of unused allowance from the prior three years and a tapered reduction for high earners. A genuine planning opportunity in the two tax years before a practice sale, because corporate pension contributions on the working principal's behalf are deductible against corporation tax and convert taxable corporate profits into tax-protected pension wealth. See /tax-structuring-practice-sale-uk/.
Recurring fees
Annual compliance work, monthly bookkeeping retainers, year-end accounts, and other ongoing tax and advisory work that repeats year after year. Distinct from one-off advisory or transactional work (M&A support, tax investigations, valuations). In valuation, the recurring proportion of the fee base is the most material single quality driver, a practice that is 80 per cent recurring trades materially higher than one that is 50 per cent recurring at the same headline turnover.
Restrictive covenant
Post-completion restrictions on the seller. The Jack Ross structure: a three-year non-compete within a defined radius of the existing office, plus a five-year non-solicitation of acquired clients and staff. Designed to protect the buyer's economic interest in the goodwill they have paid for. For a principal who genuinely intends to retire, neither restriction is contentious.
Retention test
The mechanism for testing whether deferred consideration is paid in full. The Jack Ross structure: a single 85 per cent threshold, measured at month 24 post-completion against the recurring portion of the acquired fee base, applied only against the final 25 per cent tranche. No clawback against the cash on completion or the month-12 tranche, ever. Adjustments for natural attrition (death, business closure unrelated to the deal, mutually agreed off-boards at completion, clients where the seller has subsequently taken on continuing professional work). Industry-standard variants run from 80 to 90 per cent, sometimes at the first anniversary, sometimes the second; the Jack Ross structure sits at the seller-favourable end of that range. See /deal-structure/.
Share sale
A deal structure where the buyer acquires the shares of the company that owns the practice. The seller is taxed once at CGT rates with BADR; assets, liabilities, and contracts inside the company transfer with it. Sellers typically prefer share sale; buyers typically prefer asset sale. The negotiated outcome is often a compromise.
SPA (Sale and Purchase Agreement)
The principal legal document, typically 30 to 50 pages including schedules. Includes warranties, retention test mechanics, restrictive covenants, transitional services obligations, and employment commitments. Reviewed by both solicitors over two to three rounds of mark-ups. See briefing your solicitor for what to ask them to focus on.
TSA (Transitional Services Agreement)
A schedule to the SPA covering the seller's involvement post-completion. Typically: full or part-time presence through the 12-week handover, then reduced involvement (one day a week or less) to month 12, then no formal involvement from month 13. Usually has a day-rate cap on the seller's time. See /transition-timeline/.
TUPE
Transfer of Undertakings (Protection of Employment) Regulations 2006. UK law that automatically transfers staff from seller to buyer in an asset sale, preserving their existing terms. SPA employment commitments sit on top of TUPE and add buyer-side promises that go beyond the statutory minimum.
Vendor loan
Where the seller funds part of the purchase price, repaid by the buyer from practice cash flow over an agreed period (typically three to five years). Common in MBO structures: the funding gap the bank will not fill. The vendor loan is unsecured or second-ranked behind bank funding; interest is usually charged at a commercial rate.
Warranty
A contractual statement made by the seller about a fact concerning the practice (e.g., that the books and records are accurate, that there are no undisclosed disputes, that the practice complies with regulatory requirements). If a warranty is later found to be false and causes loss, the buyer can claim damages up to a defined warranty cap (typically 30 per cent of the deal value) with a basket below which claims do not aggregate (typically £5,000).
Working capital
The day-to-day funds needed to run the practice: debtors, work-in-progress, cash, less creditors. Standard practice is to leave a "normal" working capital level at completion, with adjustments via completion accounts or a locked box mechanism. In small-practice deals the working capital adjustment is usually a smaller share of the total deal value than the headline goodwill.
Working papers
The internal client files, supporting schedules, partner review notes, and engagement letters a practice maintains alongside the formal client deliverables. A buyer's due diligence reviews working-paper quality as a proxy for partner discipline; messy or absent working papers signal a practice where the value depends on the principal personally, which lowers the multiple.