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CPA Now
Feb 20, 2017

Is Your Succession Plan Destined to Succeed?

By Michael D. Colgan, CEO and executive director


Do you have a succession plan in place? If you are a sole proprietor or a local CPA firm, the answer is “no” more often than not. According to the AICPA PCPS 2016 survey, less than 10 percent of sole proprietors have a practice continuation agreement in place, and nearly half of the respondents indicated that merging with another firm was their first choice of exit strategy. Similarly, less than half of multiowner firms in the survey have a succession plan in place, although more than 80 percent of those firms expect succession planning challenges in the next five years, during which time 40 percent of respondents plan on retiring. These are frightening number when you consider the aging demographics of our profession. The record number of new graduates entering the profession is encouraging, but it is not the answer for practitioners who are close to retirement age.

CPAs, as their clients’ trusted advisers, provide outstanding service to their small-business clients related to retirement planning and business succession. So why is it that they do not give the same level of attention to their own valuable asset – their CPA practice?

Business Hand OverOver the last several years there has been an unprecedented level of firm mergers and acquisitions. The profession currently has about 44,000 firms, with about 600 of those having 21 or more professionals. The merger market will continue to heat up in the short term, but the marketplace is likely to get very soft eventually because of the number of firms that will come into play. Why take a chance by not having a formal plan in place? Provide yourself with the same level of planning you would provide to clients.

The PICPA wants to enhance the value of your membership by providing you with reference material and tools to help you begin to develop a succession plan for your practice. Go to the Practice Management section of PICPA’s website, and link to our Succession Planning resources to find tools to assist you with addressing this issue.

In addition to links to articles, blog posts, and podcasts with valuable information from expert resources, check out Project MATS (Merger, Acquisition, Transition, Succession), a PICPA partnership with Transition Advisors LLC that provides content, advice, information, case studies, and succession services, including a free, no obligation consultation. Also available are links to PICPA professional development programs and resources through PCPS.

This information can help you realize a better financial proposition and reduce emotional stress, while providing an orderly transition for your valued clients.

The profession’s demographics point to succession planning continuing to be a significant factor in practice management in the coming years. The PICPA team is frequently asked by our members to keep our ears open about firms in the buy or sell mode. You can take control of your own plan by taking advantage of the resources we put in place to help you.


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