Planning an Exit Strategy

Many accountants we meet are excellent business advisors but sometimes neglect to take their own advice, especially when it comes to firm development and succession planning.  For many accounting practice owners, the exit strategy has been thought about and consists of building up a client base, adding a few staff, and then selling the practice to an employee or younger partner, merging with another firm, or the selling their accounting practice to an outsider.  Then, the plan is typically shelved until just before the accountant is ready for retirement.

Steven Covey, in his best selling book, The Seven Habits of Highly Effective People, advises people to begin with the end in mind.  So the wise accountant, even with no plan to sell their firm for several years, develops their firm keeping their exit in mind.

The reason this is typically not done and the plan is shelved until just before retirement is usually a flawed perspective of succession planning.  When asked what succession planning is most will reply that it is a plan focused on a single succession event.  We think succession planning is a development process that leads to an event.  The focus is spread across a series of development stages and growth steps with the natural outcome being the sale or merger of the firm to an outside firm or the continuation of the firm under new internal leadership. 

The succession plan begins with understanding your firm and your long term goals.  Only then can you begin developing, documenting and executing a succession plan.  The plan should be an all inclusive roadmap of your development stages and key milestones including client acquisition, staff development, pathways to partnership, expansion of services.  The succession plan should be developed today if not yesterday and implemented long before the seller or partners approach retirement age.

The result of a well-designed, implemented succession plan will be a larger, more profitable and easier to manage firm that can be transferred with greater ease to the successor.  The reward for the exiting owner is in greater value and consideration at the time of succession and a stronger legacy for years to come.