Succession Planning and Selling An Accountancy Practice
- Author Jeremy Kitchin
- Published November 23, 2010
- Word count 542
Succession planning should not be looked on as something that happens on a particular date in time. Accountancy practice succession is a life long process with two main goals. Primarily, its aim is to ensure the continuity of the practice from one generation to the next Succession planning should not be looked on as something that happens on a particular date in time. Accountancy practice succession is a life long process with two main goals. Primarily, its aim is to ensure the continuity of the practice from one generation to the next, and secondly, it should provide for a secure retirement for the owner(s).
So, when should an accountancy practice owner start to make a succession plan? Too often, many practice owners wait until the last minute when important options, including, for example, the inability to insure a principal or key employee, have closed. This is disadvantageous when it comes to selling an accountancy practice.
The 7 Stages of Accountancy Practice Succession Planning
- Survival
Once the business has survived the start-up stage, you should consider a business succession plan.
- Commitment
You must be committed to the concept that the business must continue to create opportunity for those to come. This commitment must be communicated clearly, extensively, and often.
- Recruitment
Recruiting good people always pays dividends and is a key area of importance in succession planning.
- Development
Investing time in developing family members, key employees, and management team members, and allowing them to exercise authority and control, will be vital to your success.
- Selection
Having developed a transition plan and recruited the right people, selecting a successor or selling an accountancy practice becomes easier. By empowering a broad range of key people, the selection process is simplified and your options are enhanced.
- Announcement
Once a succession plan is in place, you should normally communicate that plan.
- Implementation
In implementing the succession plan, you must be ready to step aside and when selling an accountancy practice - allow the successor(s) to take over. You must be prepared to take on new challenges in retirement, knowing that your financial future is secure. If seeing your business continue into the future, without compromising your own retirement needs, is important to you this last step may be the most important of all.
Selling An Accountancy Practice
You should review selling your accountancy practice every few years to make sure that it still makes sense particularly with regard to the current economic climate and size and structure of the firm.
Make sure that you have clarity around these points:
How is the value of the firm calculated?
What happens in the case of owner disability or death?
Over what period of time will the owner divest himself of his equity?
Is there a maximum amount that can be paid out to retired owners each year?
What happens if the firm cannot meet its commitments in any given year?
As an owner looking to build value into your practice, perhaps with an eye to selling an accountancy practice, you should look at your structure, as there is also the alternative of incorporating only some aspects of the business, in particular corporate finance, financial services or bureau services (bookkeeping, payroll, outsourcing, etc) these can then be sold off separately.
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