DON’T FAIL TO PLAN. CPAs have to get moving, experts say. Succession isn’t a process that can be done well under pressure or in a hurry. Firms need to address the issues of finding a new firm owner, nurturing future leaders, transitioning clients, codifying operating processes and drafting necessary agreements.

NURTURE NEXT-GENERATION LEADERS. The best new owner isn’t just someone with the purchase price; it’s a leader who can run the firm successfully so retirees’ payouts continue. Senior partners have to help younger colleagues understand owner responsibilities and the art of managing a large number of clients and complex engagements.

BOW OUT GRACEFULLY. “Retired” partners who retain control may cause turmoil. A partner who retires should relinquish equity ownership and key decision making. If a retiring partner plans to continue to come to work, the firm and the partner should define what that work will be and what both should expect.

CODIFY THE CORPORATE STRUCTURE. When owners agree in advance on a corporate structure that one managing partner will implement, then staff and partners have a model to follow, making the transition to new leadership easier.

DON’T PUT ALL THE EGGS IN ONE BASKET. Partners should use varied funding vehicles and not count on a buyout to cover retirement needs. The succession-planning survey found 77% of firms had not funded their retirement programs fully, and 61% had no retirement funding at all. Funded retirement plans give partners the security to make practice continuation decisions that emphasize the needs of clients and staff.

REMEMBER THE BIG PICTURE. When firms consider succession planning to be one aspect of running a better business—one that can weather a successful switch to a new generation of leaders—they will be able to achieve the best results.

Did this answer your question?