Succession Planning for CPA Practice owners – 5 Key Concepts

We always hear about the lack of succession planning for CPA practice owners, but we find that a few key planning pieces can make a huge difference. In fact, we get a lot of calls from owners who are three to five years away from selling. Our experience is that these few key issues really don’t take a tremendous amount of time or complex planning. Most of the difficult planning issues are the ones that only the owner(s) can answer anyway. A little guidance coupled with common sense will generally pave the way to a smooth succession. We are happy to offer our insights in helping to guide CPA practice owners while in this crucial planning phase.

Here are a few key areas of succession planning that we most commonly encounter.

1 – Time frame for a sale needs to be determined.

This is one of the most difficult questions to answer. There are so many factors involved. Considerations include financial, personal, family, market conditions, etc. We’ve seen people really struggle with this one and unfortunately there are no magic answers. With the possibility of over-generalizing – I can say that it’s a process. Don’t sell your CPA Practice until you are really ready. If you are in a major metropolitan area, selling can be done relatively quickly. If your practice is in a rural location, it can take longer to find the right buyer.

2 – Partner exit timetables are almost never the same.

This is probably the second most difficult issue to navigate. It’s extremely helpful to have good partner communication in the years prior to the exit. The partner(s) that will remain with the practice need to be supportive of those who want to retire or move on. The desire to exit isn’t the type of thing you want to spring on your partner(s).

3 – Don’t put all of your eggs into one basket.

It’s really difficult to try to sell when you have only one potential buyer. Grooming someone to take over should be considered as one option instead of the “only” option. It’s also smart not to make promises too soon to an employee with potential. We find the best way to present the opportunity to an employee is when the practice is already on the open market. This will put the owner in a far stronger negotiating position and will actually avoid ill feelings. The employee(s) are still getting the first shot at the practice, but it’s also clear that they are not the only option.

4 – Do you have non-solicitation agreements with key employees?

These are easy to get when hiring, but very difficult to get when you want to sell your CPA firm. The sooner the better.

5 – Is your CPA practice attractive to potential buyers?

This is probably the single best thing to focus on as you approach the time to sell. Buyers want profitable firms and truth be told, they don’t really want to work all that hard if they can help it. The next generation is very focused on achieving balance in life. They want time – which really is the most important thing we all have. For more information on optimizing your accounting practice, please visit our resources page.


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