Succession and Your Firm
Succession is one of the most pressing issues for CPA firms today. With so many partners nearing retirement age, firms are scrambling to put a succession plan in place. The AICPA’s numbers indicate a startling 55% of CPA firms have no succession plan mapped out.
It’s generally preferable to transfer ownership internally rather than externally, and most likely, you’ve already got talented prospects for firm leadership. How do you go about this process? In a new article from Accounting Today, columnist Ira Rosenbloom suggests you treat the next generation of leadership at your firm as you would a prospective client.
“Your successor, much like any other consumer, needs to know the risks and rewards, and what’s in it for them,” writes Rosenbloom. “As an owner, you may not be ready to leave today, but it’s incredibly important to think through and act on these steps to properly craft and position a sales pitch to your internal successor. Put plans in place now to ensure the firm stays on track for future viability, stability and success.”
Rosenbloom’s article is all about crafting that sales pitch, and he offers a few key elements that you should include. First, emphasize the appreciation of the firm’s assets and income. Let your potential leaders know how your firm’s value has grown, and what the income could be at partner level. It could also be helpful to show your candidates some data from a benchmarking report such as The Rosenberg Survey.
You will want to give a complete picture of your firm, including its liabilities. You don’t need to over-emphasize them, but you do want your potential firm leaders to have realistic expectations. As you make your presentation, be sure to let them know what life is like as a firm leader. They know you work hard, but impress upon them the flexibility and freedom you have as an owner.
To read more, see Rosenbloom’s full article from Accounting Today.