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The major challenge for retirement
baby boomer firm owners is the proper
transition of the firm. Less than one-
half (44 percent) of multi-owner firms
report having a written and approved
succession plan in place, according
to the most recent AICPA Private
Companies Practice Section survey.
Options for Firm Owners
If you are an equity partner, you need
to think about the best way to get your
ownership buyout from the firm you
helped to build. Your options are:
Stay independent.
Develop future partners to buy the
present equity partners out through
internal promotions, recruiting top
talent, or merging in smaller firms.
This option, when handled correctly,
can create a better opportunity to
find those needed future equity
Merge with a similarly sized or
larger firm.
Merging into a larger firm can be
very positive and usually cures any
buyout issues, but the firm's current
partners give up a fair amount of
control. Firms can also merge with
similar-size firms, which can be
very effective in the long term if
the combined firm can survive the
early years of trying to sort out the
management/control issues.
Don't think about the future.
(Hint: Don't use this option.)
Just keep running your firm day
to day and don't try to develop
future leaders or look at merger
opportunities. This option can work
for years ... but it usually doesn't
end well, and it's not fair to your
employees, fellow partners, or the
firm's clients.
Preparing Your Firm for the Future
Keep in mind, as equity partners
continue the march toward retirement,
the mergers and acquisitions world
will continue to become more and
more of a buyer's market. Therefore,
during this period of huge transition
of leadership, firms need to increase
their market value by looking for ways
to continually improve all areas of their
firm on an annual basis.
If your firm starts to improve your op-
erations, your human resources pro-
grams, your technology infrastructure,
your key financial metrics, your mar-
keting outreach, and your firm culture,
your firm will be worth more to larger
firms looking for an acquisition. Addi-
tionally, as you work to improve all of
these areas, you may attract new lead-
ers within the firm who are willing and
able to take on the obligations of own-
ership and keep the firm independent.
At the end of the day, if equity partners
invest in the continual improvements
of the firm, they will have put the
firm in the best position to deal with
the oncoming retirement wave. Firm
leaders who choose to positively attack
their business issues during these
challenging times will ultimately create
a better outcome for their employees,
partners, and clients, regardless of
whether the firm merges upstream or
stays independent.
The retirement of the baby boom-
er generation will create many op-
portunities for all members of CPA
firms throughout Connecticut. How-
ever, only those employees, partners,
and firms that accept the challenge
to continually improve will be able to
capitalize on these opportunities!
Firm leaders who choose to positively attack their business issues
during these challenging times will ultimately create a better outcome.
Opportunities and Challenges for Firm Owners
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