How to Prepare for Succession or Sale

Source: Accounting Office Management & Administration Report

Highlights of the presentation by Bill Reeb at the AICPA Practitioners Symposium.

• A sale to an insider will bring more than a sale to an outsider. Partners want to continue to do what they are doing, and they will have less risk than an outsider.
• Base the operations of your firm on a 45-hour week, not a 60-hour week. You will have more staff.
• If you lose staff and partners, you will also lose interest by potential buyers.
• Raise fees to where they should be.
• Train staff and give them raises. That will help you raise your fees.
• Don’t discount fees to keep people busy. It doesn’t make sense when talent is scarce.
• Convert bad clients to good ones or fire them. It will increase value and make your work more interesting.
• Discontinue services that are not deliverable by more than one person. Or expand them. If only one person provides the service, it has less value.
• Focus on increasing services to existing clients. Most growth comes from work for, or referrals by, existing clients.
• Aim for 90 percent capacity, not the 110 percent of most firms. Growth without control causes bad service.
• Operate as one firm. Don’t let rainmakers “hold other partners hostage.” The “Eat What You Kill” method can work in firms up to $5 million. Beyond that you should create a “Build a Village Model,” to develop talent and grow. The BAV model is about training, systems and procedures, and infrastructure. It creates a firm someone else can manage.
• Partners must concentrate on client relationships. This expands partners’ client bases and enhances staff competencies. Partners should train staff and delegate. Realization will be higher.
• Push work down to the lowest possible levels.

From Accounting Office Management & Administration Report, July 2008, p. 1. For subscription information contact Institute of Management & Administration, Inc., 3 Park Avenue, 30th Floor, New York, NY 10016-5902. One-year subscription $399. 212-244-0360, [email protected].

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