succession

what a cpa firm is worth

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calculatorlook at the revenue stream. goodwill is another story.

by marc rosenberg
retirements & buyouts

to illustrate a cpa firm’s value, let’s use an example of a plain-vanilla or average firm:

  • annual revenues: $6 million.
  • six partners with ages spread evenly between 45 and 62.
  • average partner income: $350,000.
  • ratio of professional staff to partner is 3.5.
  • firm is located in a city with a population in excess of 1m.
  • clients are all in common industries such as manufacturing, real estate, health care, etc. no niches or specialties.
  • services are all traditional annuity types such as accounting and tax.
  • the firm’s accrual basis capital, primarily wip and a/r, is $1.2m.

now, let’s compute the value.

read more →

‘show me the money!’ partners balk at retirement planning

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targeted retirement age as cpa ages
targeted retirement age as cpa ages

developing successful strategies for changing expectations.

by marc rosenberg
cpa firm retirements & buyouts

the concept of retirement for cpas is rather amusing.

younger partners (say, under 40) insist with unshakable confidence that the oldest they will ever work is 50 or 55. they have other things to do with their lives (own another business, do charity work, pursue hobbies, etc.) besides working at a cpa firm and they want to pursue these interests while still young.

older partners (say, over 55) see themselves working indefinitely, with 65 being the earliest age that they will even consider retiring. read more →

do cpa firm mergers really work?

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6 metrics to measure success. procrastinators’ 3 myths. and 5 steps you can’t skip.

by marc rosenberg
cpa firm mergers

as a generation of aging baby boomer partners marches towards retirement, thousands of firms are seeking the only exit strategy available to them – merge into another firm. thus has a voracious appetite for mergers been created at all size levels, particularly:

  • sellers who are sole practitioners (remember, 30,000 of the u.s.’s 45,000 aicpa-member firms are solos and a huge percentage of those are at an advanced age) and multipartner firms billing under $2 milllion a year.
  • buyers with annual revenues of $3 milion and more.

do mergers work?

well, that’s what doing a merger successfully is all about – asking the “right” questions.
look at the reasons why the merger was done in the first place and see if those goals were met.

good examples of the “right” questions: read more →

6 reasons to keep partners from retiring

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aquila
aquila

and 4 ways to put them to good use.

by august j. aquila
creating the effective partnership

there may be some senior partners who want to spend their remaining years basking in the sun or playing golf. but, given the negative and low returns of the stock market the last few years, more senior partners will be concerned about their economic future and will want to stay involved in the profession. this can be a win-win situation for both parties or it can be a lose-lose.

senior partners have a wealth of knowledge that you don’t want to lose. for example, they possess: read more →

succession planning for cpas: just imagine

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ed mendlowitz cpa the practice doctor q and aquestion: i am 57 and have become very concerned about retiring and what i could get for my practice, how long i would have to stay and how the whole process works. i believe i’ve read all of your q&as but have never heard you speak on this subject. is there anything you can give me to read that sort of ties in everything?

response: for cpas in practice, succession planning takes on a meaning other than what it might seem. many of the cpas i know find it difficult to imagine themselves retiring, and therefore do little in the way of planning. for those who think they will work until they drop, stop reading now and go to the sudoku puzzle, because that will probably provide you with more gratification in the long run. read more →

2014 roundtable: the baby boomers take control

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2014 top trends logo vf
click for the full rosenberg map survey

as one generation ages out, a new one reshapes the future of the profession.

see the complete 2014 roundtable

by jennifer wilson
convergence coaching

analysis

without a doubt, succession issues permeate all aspects of the firms we’re encountering.

these include identifying and developing successors — especially rainmakers and practice leaders, ensuring that the buy/sell makes sense and can be sustained over time, determining retirement timing and issues, establishing and executing transition plans, communicating plans, recruiting new talent to backfill positions and exploring new ways to govern the firm to give more voice to those who will be taking over. succession implications are far-reaching and can be consuming. read more →

9 essential calculations for retirement buyouts

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and the difference between smaller firms and larger firms.

by marc rosenberg
author of how to bring in new partners 

maybe you’ve noticed this too: many midsize and larger firms retire partners at one times annual fees or less, while smaller firms are often sold for well over that.

how can you reconcile those two very different valuations? the answer, of course, is in the math.

here are the nine essential calculations… read more →

partner retirements and buyouts: today’s 24 major deal points

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what 80% of firms agree on.

by marc rosenberg
the rosenberg survey

if partner compensation is the single most critical and sensitive aspect of cpa firm practice management today, then a close second is partner retirements and buyouts – the money partners receive for the purchase of their ownership in the firm when they retire or leave the firm due to death, disability, withdrawal or expulsion.

the amount of money involved is quite significant.  roughly 80% of all firms consider the value of the firm to include: read more →

partner succession: it’s all about client transition and retention

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by gary adamson, cpa
adamson advisory

cpa firms are wrestling their way through partner retirements and the accompanying succession issues in numbers that the profession has never seen before. it’s the baby boomer bubble, up close and personal.

our succession planning should focus on replacing that retiring partner’s contribution on several fronts. depending on the role of the retiring partner in the firm we will experience varying levels of pain surrounding things like replacing significant knowledge or technical expertise, back-filling a block of hours to get the work done and shoring up voids left in firm leadership. these are all significant issues and deserve a plan of their own.

but the biggie  is the transition of client relationships. read more →

questions and answers on selling a practice to staff members

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by ed mendlowitz
author of “implementing fee increases“

i received two related questions, which i’ll answer together.

first question: i am nearing retirement and want to sell my practice to two longtime staff people, but they don’t get along, and i’m afraid to sell to them. what should i do?

second question: i have a large individual tax practice, but also have an audit practice that is handled by different staff in my firm. how do i sell this practice? none of the larger buyers want the tax clients and none of the smaller buyers want the audit clients. read more →

what to think about before you start thinking about merging your practice

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plus: key considerations in evaluating a practice continuation agreement

by ed mendlowitz

question: what i should do about merging? i need a specific answer.

answer: i can’t give you an easy answer. i can give you a process to follow that should provide an answer. actually, this works pretty well and i’ve gotten good feedback from many colleagues. i’ve also rethought it many times, and still think this is the way to go about it.

read more →

why solo cpas won’t sell out

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and what to do about it if you want to buy their practice. what is it about the sole practitioner that prevents them from doing something that seems to make so much sense? they need to do something soon about … continued

marketing directors take over succession planning

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or, isn’t this really the partners’ job?

lisa tierney

accounting firm marketers – already tasked with landing new clients and adding new revenue, in addition to recruiting new staffers – are getting a new job: succession planning.

a new survey of 100 marketers shows 35% cite “the identification and development of potential successors for retiring managing partners as their top priority over the next 12 months.”

the new data suggests turnover among managing partners in the next 12 months will be far greater than anyone now imagines and it speaks to the critical inadequacy of incumbent partner teams to deal with the crisis on their own.

the survey was conducted among members of the bkr international network of firms by tierney coaching & consulting. here, lisa tierney reports on the results and the implications.

her report includes data and commentary on:

  • leadership as a top concern for firms
  • five challenges to be considered over the next 10 years
  • how a firm’s success is integral to the effective leadership of its professionals
  • the definition of effective leadership as it applies to the successful firm
  • six key leadership characteristics defined
  • the distinct roles
    • for partners,
    • for seniors and managers, and
    • for supervisors and associates
  • leadership and team building strategies

– rick telberg read more →