Most accountants and related professional practices fail to plan for their business or practice succession or business exit. This is a tremendous missed opportunity! Fortunately for them most accounting practices perform bookkeeping, audit and/or tax work which is reoccurring and therefore has value.

But, perhaps they do not get the price and terms they would like, fair treatment of your employees as you transition, and other factors that can be obtained – with planning and focus.

I have developed the below presentation – “7 Pitfalls to Succession and Exit Planning for Accountants and Professionals.” This was recorded at the 2021 Attorney CPA Association Conference. A summary of the Seven Pitfalls below the video highlighting high level concepts but not nearly all the details on the video. If you would like assistance with a valuation of your business or help in structuring a plan please contact us.

7 Pitfalls in Accounting and Professional Practice Succession and Exit Planning

1. The Laws Of Gravity Do Not Apply To Me – We all get in our own way. Get out of your way, start, do it. Most of us enjoy our practices and want things to stay the same. We also tend to believe, or at least act like we believe today is going to continue forever. But it does not. Do not be the professional who’s practice dissolves due to sickness or injury during tax season. TAKE ACTION NOW.
2. Your ATM Is Out Of Service Too Often – You business needs to be easy to run, predictable, and profitable. A lot like an ATM which has a simple system that produces money. Think how upset you used to be (back when you needed cash) when the ATM did not work. Your practice is the same way. Buyers become very concerned when things are not good and getting better.
3. There Are No Options – There are many exit options but most take five to seven years to fully implement. Start early. In fact, incorporate it into your annual planning sessions with your key staff.
4. Deloitte Is Going To Buy Me – Know your best buyer. Many partners and owners believe that they will be acquired or merge with a much larger firm than is likely to happen. (Right now with roll-ups in the accounting space that may happen but it is not the normal state.) Reach out to firms you think might acquire you or that you would like to have acquire you and go to lunch and discuss you far off succession plans. Ask them questions about what they will be looking for. Learn who your best buyer is and what they want and do not want.
5. It’s All About The Numbers – It absolutely is about the numbers but don’t discount business culture. But, in most accounting and professional practice transitions it is also about the people. Your people staying and being productive and excited and the people you are likely to work for during your transition period. Make sure you get to know who these buyers really are.
6. Negotiating A Transaction Is Not Like Testifying – If going to market makes sense (or even for many internal transactions) the negotiation skills to get you your best deal (the one you want) requires making a vibrant market and then having negotiation skills. These skills are not always intuitive and like any skill are honed with experience.
7. DIY – Don’t Do It Yourself. People pay your high hourly rates for your expertise. You know you give great value. Don’t shortchange yourself on your future and the exit from your accounting or professional practice. Put together a team including a financial planner, lawyer(s), business improvement consultant (if needed), business broker if going to market, valuation expert.

Finally – Make A Plan – Make a plan with key tasks listed AND who is responsible with a due date. Review it monthly or at least quarterly. Start today!

For a very simple exit plan form / format you can prepare in 15 minutes send us an email today and we will promptly get one to you.

Gregory R. Caruso the presenter and author of the above article has spent 35+ years putting together transactions and valuing businesses. Have a question? Reach out today.