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The challenges facing firms with four or more partners are often different from firms with fewer partners. In the larger firm, it is less likely a partner will possesses a book of business that is a significant percentage of the overall firm. So there is a higher probability a partner can reduce his or her time commitment to the firm with less exposure to client attrition. However, many
firms, with a partner group numbering four to six, face the difficult task of coming to agreement about the necessity for and specifics of a partner succession plan.
The talent shortage will most likely continue as fewer accounting graduates are seeking employment in public accounting. Rules on certification are changing and in some cases, state regulatory agencies have initiated legislation where an internship in a CPA firm is no longer necessary.
The ripple effect is making it even more difficult as business and industry can dangle the dollar carrot in front of new CPAs and lure them away from public accounting. This puts additional pressure on the firms in the four to six partner group because making a lucrative offer to a talented and motivated younger CPA is not something many firms of this size are able to do.
For firms of this size it is critical that steps are taken and strategic succession or transition plans are made to minimize the potential negative financial effect on the firm, upcoming partners, staff and the potential for a parallel reduced service level to the clients.
You can control succession, internal or external, (or the sale of your practice) if you understand your options and have the information to make informed decisions. (See alsoSelling and Succession: 1-3 Partners as much of that information can be applicable to a larger firm.)
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