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Accountants: What's Your Succession Plan?


The succession plan for your firm can often be as complex as a royal succession. The succession plan for your firm can often be as complex as a royal succession.

At Xerocon, I was excited to hear a keynote from Amanda Armstrong, who took a look at some of the learnings gleamed from the 2013 CCH Business Fitness GBU (the Good, the Bad, and the Ugly) Survey. This report is an annual benchmarking survey that analyses a wide range of KPI’s and management trends within NZ accounting firms. The GBU report identifies challenges and trends affecting accounting firms across the country.

One of the challenges highlighted in this survey, which Amanda spoke about in her keynote, was the lack of succession planning done by accountants. 35% of all leaders in local firms are aged over 50. This means that in the next 10-15 years, we’re going to see a mass exodus of high-level accounting professionals as they retire. So who will take their place, and what will happen to their companies?

Mark Fowler, CPA, CMC, President of Stove Management Corporation, wrote in his article “Succession Planning: Both Sides Now” that the need for succession plans for accounting firms is growing more urgent, due to a combination of the aging practitioner base, the changing needs of clients, and the demographics and interests of those coming up the career ladder.

Of the firms considered “in decline”, 29% did not have a succession plan. And this is a real problem, because just as the exodus of older leaders begins, the next generation of younger, more tech-savvy accountants and bookkeepers will be waiting in the wings. And they will be doing things very differently. First on their list will be cloud-based accounting. Will they be interested in buying your company if you’re not embracing cloud technology?

What’s your succession strategy?

So, what are you doing to create a succession plan for your accounting/bookkeeping firm? And how are you going to carry out that strategy as you move closer to retirement?

Are you training someone up?


When it's time to hand over the keys, you need to know your firm is in good hands. When it's time to hand over the keys, you need to know your firm is in good hands.

Many firms will choose someone already at the firm and groom him/her to take over. This ensures the firm remains in the power of someone “on the inside” and that there is as smooth a transition for clients as possible. This is particularly common in family-owned firms.

Here are some tips for training a replacement:

  • Choose the RIGHT successor. And that might not necessarily be your golf partner. You’ll need someone who is dedicated to moving the business forward, not just maintaining the status quo.

  • Provide formal coaching. Once you’ve chosen a successor (it’s starting to sound a bit like a royal line, isn’t it?) bring them up-to-speed with formal education. If they are young, there will be a lot about the management / strategy side of business they won’t understand, and creating a formal process ensures you both remain accountable for passing on this knowledge.

  • Develop a working relationship between clients and staff - including support staff who might not usually deal directly with clients. Having this face-to-face relationship helps the whole process go smoother during transition. Many clients will feel abandoned if yours is the only familiar face, and you suddenly leave.

  • Ask early on for advice from your successor about moving the company forward into the future. Processes such as moving to cloud-based technology need to being NOW, not when you hand over the reigns.

  • Slowly hand over more responsibility to your successor. Gradually introduce them to more of the aspects of their role.

  • Talk to a lawyer about drawing up the proper agreements.

  • If the firm is a family business, or you’re passing on control to a family member, it is important to talk to your lawyer about the implications of this decision. Family arrangements can get tricky when, for instance, one sibling works in the firm and the others do not, or one sibling is promoted above the others.

  • Make sure that current and future partner agreements contain details about succession planning issues and logistics. Talk to a consultant for advice.

Are you selling/merging/downsizing?


If you're selling your firm, you need to have the business in the best shape possible. If you're selling your firm, you need to have the business in the best shape possible.

Alternatively, you could sell your firm to an outside buyer, perhaps someone looking to make their mark at an established firm, or looking to merge their firm with yours to take advantage of market share or different specialties. There are many different ways this could play out:

  • Will the company itself purchase your shares?

  • Will other partners divide ownership between themselves? Do you need to appoint other partners?

  • Will you sell to an external buyer?

  • Will you merge with another firm?

  • Will you downsize the firm before selling / merging or passing on to a partner?

Whichever option you choose, you’ll need to ensure you have a plan in place to ensure the smooth transition. Preparing for selling or merging can be a harrowing process, as you know every aspect of your company will come under scrutiny. You need to have rock-solid tools and a great business to show off. In cases where significant changes are occurring at a company level, it can often be beneficial to bring in succession planning consultants to smooth the process.

Think about this: If you’re not in the cloud, if your firm isn’t using the latest technology, then who is going to buy your company? You’ll want to make your firm as attractive as possible to potential buyers, because the more it’s worth, the more luxurious your retirement will be :)

What about an emergency situation?

It’s not nice to think about, but what if you got hit by a bus tomorrow? Would your firm survive? When thinking about succession planning it is ALSO important to think about the needs of the firm should you be unexpectedly unable to continue to manage it. This planning usually begins with a chat with your lawyer or financial planner, and may cover:

  • buy/sell agreements for death and disability scenarios.

  • Life insurance, including both that owned by the business and that owned privately.

  • Other insurances, such as key person insurance and long-term care insurance.

  • Retirement savings plans.

  • Establishment of trusts to protect company and personal assets.

How to make the process as seamless as possible:

Any succession process will be a major upheaval for a firm, but you want it to go as smoothly as possible, especially when clients are concerned. Starting early and putting clear processes in place will help the transition go smoothly for everyone concerned:

  • Ideally, you want to start the process of client transition two years before your retirement. This is because many of the larger clients will take two cycles to transition to a new partner.

  • Focus on getting your administration processes in order. If someone wants to buy your firm, but discovers you’re still timesheeting in excel and that admin is laborious and prehistoric, they might think twice. Plus, a seamless admin process will make transitioning duties currently done by you to a new party much easier.

  • Enhance the sales and marketing skills of your team. Create an invaluable asset for a future buyer.

  • Spend generously on resources to hire and develop top-thinking people. It is these people who will be the future of your company.

  • Database - giving permissions and ensuring others know how to manage this.

  • Marketing - package marketing techniques in one document for easy referral.

More suggestions

  • In his article Partner Succession: It’s all About Client Transition & Retention, Gary Adamson recommends having a mandatory age of retirement for all partners of a firm. This allows the firm to know in advance when transition is immenent.

  • Adamson also suggests grouping clients together based on the ease of transition and dealing with each group separately.

  • The importance of cloud accounting to your firm’s future cannot be stressed enough. Sure, you may be functioning perfectly well now, dealing with the percentage of the market who is not working in the cloud (80% in New Zealand). But keep in mind that while not all businesses are using the cloud yet, an increasing number of business are intending to make the switch in the future, and that number will only increase. Currently, 72% of SMEs aged between 18-34 will consider looking for a new firm if their current accountants do not embrace the cloud (GBU Report). Don’t be the company they’re switching from - be the company they’re switching TO.

Succession planning, like retirement planning, isn’t something you should put off and “worry about when the time comes”. The future of your firm - and perhaps your future nest-egg - depends on your ability to plan ahead and make sure you’re ready for the big transition.

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Steff Green
Steff Green is one of WorkflowMax's resident wordsmiths, writing everything from website pages to blog posts, ebooks, emails and everything in between. Steff is also an award-winning author, with several fantasy novels available on Amazon. When she’s not writing up a storm, Steff lives on a lifestyle block with her musician husband, two cantankerous cats, several sheep and chickens and her medieval sword collection.

Steff Green