The Impact of a Recession on Goodwill Valuation of Accountancy Practices
What actually drives goodwill value when conditions get harder — updated for 2026
It’s worth being clear from the outset: the UK is not in recession as we write this in 2026. The economy is forecast to grow modestly this year, at around 1%, with Bank Rate held at 3.75% and inflation running at 2.8% as of May 2026 (Bank of England MPC minutes, 17 June 2026). That’s a different backdrop from the 2008–09 downturn, when GDP contracted sharply and credit dried up almost overnight. But the underlying question — what happens to the goodwill value of an accountancy practice when conditions do get harder — is still worth understanding properly, both because economic cycles turn, and because some of the same pressures show up in milder form even in a modestly-growing economy.
Profit remains the dominant driver
Whatever the economic backdrop, the single most influential factor in the valuation of goodwill is profit. Location, presentation, growth potential and the wider economic climate all matter, and can move a valuation meaningfully at the margins — but none of them carries anything like the weight that sustainable, demonstrable profit does. A practice with strong, well-documented profitability will always command more interest, and a stronger multiple, than one without — recession or no recession.
What actually happens to practices in a downturn
In a genuine downturn, several things tend to happen at once, and they pull in different directions.
Clients become more cost-conscious, putting direct pressure on fees, and a serious downturn typically costs practices a real number of clients outright, where those clients’ own businesses don’t survive. The 2008–09 recession and, more recently, the pandemic period both did meaningful damage on this front.
At the same time, costs tend to rise, both from inflation and from an accumulating regulatory workload — professional obligations don’t pause for a downturn, and if anything the compliance burden on practices has only grown over the past decade.
That combination — fee pressure alongside rising costs — actually increases the appeal of acquiring additional fee volume, because spreading fixed overheads across a larger client base is one of the few reliable ways to protect margin when conditions tighten. This is part of why blocks of fees tend to remain in demand even when the wider economic mood is cautious.
The counterweight is financing. It becomes harder to secure bank finance for the purchase of larger blocks of fees in a downturn, which tends to make high multiples on bigger acquisitions harder to achieve — buyers are still out there, but they have less borrowed capital behind them, and lenders get more selective about what they’ll support.
Buyer behaviour shifts, even without a full recession
You don’t need a technical recession for buyer behaviour to shift in this direction. Even in the current, modestly-growing environment, we’re seeing buyers pay closer attention to the quality and durability of a practice’s profit — not just its headline turnover — and lean harder on due diligence before committing. That’s a sensible instinct in any environment, but it becomes more pronounced whenever economic conditions feel less certain, which is worth bearing in mind if you’re planning a sale during a period when confidence is mixed, even short of a genuine downturn.
What 2008–09 still teaches us
The last genuine recession to hit this profession hard is still a useful reference point, even nearly two decades on. Goodwill multiples softened during that period — not because clients stopped needing accountants, but because buyer confidence and available finance both contracted at the same time, and vendors who tried to sell into that environment without adjusting their expectations found the process slower and the eventual price lower than they’d hoped. The practices that fared best were the ones that went into the downturn already well-prepared: clean records, a diversified client base not overly concentrated in vulnerable sectors, and a genuine trading history of profitability rather than a single good year. That lesson doesn’t require a recession to be worth applying — it’s simply good practice at any point in the cycle.
Adding value ahead of a sale
As with selling a property, a vendor should look to improve the practice’s position before approaching the market, rather than after. Our advice here hasn’t really changed: plan ahead, and treat succession planning as an ongoing discipline rather than something to address only once a sale is on the horizon. A long list of factors feeds into a valuation beyond the headline profit figure — the quality of administrative records and systems, how well-trained the staff are, and the portability and age of the client base among them. The best route to a strong valuation and a smooth transition is to think continually about how today’s decisions affect tomorrow’s sale value, well before you’re ready to sell.
None of this changes in a downturn — if anything, it matters more, because a well-prepared practice holds its value far better under pressure than one that’s neglected these fundamentals and is only addressing them once a sale is already underway.