Succession Planning—When Do You Begin?

Source: Small Firm Solutions

The value of your firm ultimately depends on retaining as many clients as possible after a sale.

Many practitioners expect to transition their firms to new owners over a period of time. It takes time for clients to become accustomed to, and accept, a new owner. If you see clients just once a year, it may take several years for clients to become comfortable with the new owner. So entering a phased sale of the practice five years before you intend to completely retire is not unreasonable.

Other factors that affect succession planning include:

• Investments in staff or technology—before making these investments consider them in relation to your retirement plans. Affiliating with another firm may obviate the need.
• Leases—if retirement, or phased retirement, will start in less than five years, a long-term lease may not be smart. Potential successor firms may not need your space.

For more on this subject, see The Two-Phased Merger Process in the April 2006 issue of CPA Leadership Report.

From Small Firm Solutions Winning Strategies for Profitable Firms, AICPA, Vol. 1 Issue 1, summer 2007, p. 5. For the complete article, click here.