Many small accounting firm owners fear no other accountants can fill their shoes, and that there’s no value in their practices. This article offers strategies for overcoming these fears and creating value to be transitioned to others:

• It is crucial that aging partners allow others in the firm to take responsibility for decisions. Otherwise, clients will leave the firm when the partners retire.
• Small firms should keep records of demographic information on client bases, realization, utilization, billing rates, etc. and compare this information to what they can learn about competitors.
• If you have a prosperous firm that has growth ahead of it, ask the following questions:
  • When do you expect to retire?
  • What role, if any, will you have with the firm after you retire?
  • What do you expect to receive for the sale of the firm? Under what terms?

Your answers to these questions will help you envision a successful exit.

• Consider your exit options:
  • If sale or upward merger is your best choice, plan for it by becoming better known. Attend and be involved in CPA society events, join round tables, become part of an alliance of firms, etc.
  • Perpetuate the firm. This means developing people to take over your practice and buy you out.
  • If you are part of a joint practice not managed as a firm, you have the option to consider splitting your practice off, making it more attractive to buyers.
  • Merge with another small firm, and seek a buyer for the combined firms. By virtue of size and other factors, this may make you more attractive to a buyer.
• Take an objective look at your practice to determine if it can thrive without you. If the answer is no, determine what must be done to change it:
  • Do you have ineffective partners?
  • Are there no leadership candidates among the staff?
  • Is there no planning going on?
  • Are egos in the way?
  • Is there no investment in business development or technology?
• Distinguish between leadership and management. Leadership is vision, motivation, and reaching goals. Management is controlling activities of the organization.
• If you can successfully prepare your firm and position it for the future, you will have created a valuable experience you can use to help clients. Small accounting firms aren’t the only companies unprepared for transitioning into the future. A retired, or perhaps semi-retired, practitioner can use his or her experience as a basis for guiding other companies through a similar process.

From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, January 2006, p. 3.