Accounting practice sales are different for small firms so succession planning for small firms should be different too.
The fewer partners and employees a firm has, the more difficult an internal succession is likely to be. Internal succession makes perfect sense for larger firms for many different reasons. Large firms have human resources and recruiting departments. They have systems in place to continually seek and nurture people who demonstrate partner potential. It would also be impossible to conduct an outside sale every time a partner wants to retire. Large firms tend to have a clear partnership path to replace retiring partners.
Small firm succession planning needs to factor in a few very important differences.
First of all, the fewer staff you have, the less likely you are to have a good candidate to take your place. Most people are just not cut-out to be business owners. Think about your clients and think about what it takes to run a business. The most successful business owners are a different breed. Most of your employees are not likely to want the responsibilities of ownership and if they do, they still may not be capable of doing so. Entrepreneurial accountants represent a small percentage of the profession. It is quite likely that you have no one on staff that is both willing and capable. No matter how hard you might try to make someone capable, it simply won’t work. Most of the traits required to run a practice well are “factory installed.” Secondly, if you are lucky enough to have one such individual on your staff, then you are limiting yourself to one buyer. It is far easier to negotiate fair-market terms with a larger universe of buyers….and thirdly, they may not have the money to purchase. (Minor detail right?)
Succession Planning Guide for Accountants.
Start creating your succession plan using the simple strategies found in this guide.