Securing the Future
Securing the Future, Volume 1: Building Your Firm’s Succession Plan
Is your firm poised for long-term success and viability? Do you even know what that looks like for your firm?
The reality is that most CPA firms have their work cut out for them if they want exiting partners to retire comfortably and future leaders to flourish. In the new edition of this popular book and its companion workbook, Reeb and Cingoranelli impart the same no-nonsense advice on succession planning and management that they share with their clients, providing you with the benefits of their years of experience, research, and methodologies.
Volume 1 covers fundamental succession and management concepts to ensure that every partner and manager is on the same page and working toward a shared vision. After reading this book you will be able to:
- Take steps to maximize your firm’s value
- Shore up your business strategy and operations
- Remove personal preferences and entitlements from partner discussions
- Build a strong partner group
- Ensure your firm survives the departure of key people by creating or improving your succession plan, and more!
Securing the Future, Volume 2: Implementing Your Firm’s Succession Plan
Once your firm’s leadership is on board with the fundamental concepts, Volume 2 provides your implementation team with the tools and resources they need to make it a reality.
This workbook includes the tools, tactics, and strategies you need to draft a customized plan and see it through. Each chapter includes expert-developed exercises, forms, and checklists tailored to each phase of the planning process. Also available as a PDF Toolkit to simplify your planning!
Save when you purchase the two volume set – plus there’s no additional shipping & handling charge!
Table of Contents
Why Does This Matter, and Why Now?
Why now, indeed! Why would anyone care now about the topic of succession management? Consider the AICPA Private Company Practice Section (PCPS) top issues survey for the last 6 years. Succession ranked in the top 5 issues for each of those surveys for firms with 21 or more professionals (succession management showed up as issue 3, issue 5, and most recently as issue 4 of their top concerns). Of course, we’re biased, but we believe one would have to have been living in a cave for the last 5 years not to be aware of the importance of the succession management topic to our profession. Although an individual firm reading this might not consider succession a top priority, largely due to some basic demographic facts of life, almost 80 percent of multiowner firms responding to the most recent PCPS/Succession Institute Succession Survey felt like succession management would be a significant issue for them in the next 10 years. Considering that less than 10 percent of sole proprietors and solo practitioners in that same survey even have a practice continuation agreement, that group clearly isn’t ready for succession, either.
To put this in perspective, baby boomers, who were born and grew up after World War II (1946–1964), make up a large portion of the working U.S. population. A myriad of issues has come with the aging of this group, not the least of which is dealing with the exit strategies of business owners, together with all the related issues of retirement and overall financial planning for retirement. And it’s not going to get any better in the near future—baby boomers currently account for more than 1 in 4 Americans. At the same time, the subsequent generations are smaller in size than the boomer generation, resulting in concerns about who is even available to replace exiting boomers across all segments, industries, and professions. And when you consider “The U.S. Census Report 65+ in the United States: 2005,” which estimated a total of 36 million people 65 years of age or over in 2003, and projects for that same category 72 million in 2030 and 87 million in 2050, it is easy to see why demographers are calling this the “silver tsunami.” In a speech at a recent AICPA Council meeting, Dr. James H. Johnson, Jr., of the University of North Carolina at Chapel Hill, noted that over 8,000 people per day are turning 65 in the United States (or someone is turning 65 about every 6 seconds), and it is expected that this trend will continue for the next 2 decades. Regardless of your profession or industry, if succession management is not a near-term issue for you to address right now (based on demographics alone), it will likely be one for you to address soon.
Given this, it should be no surprise that we believe that all organizations need to plan for succession, whether they are nonprofit or for-profit in nature, and whether they are in the business of selling goods or time or expertise. This text and its companion field guide, Securing the Future, Volume 2: Implementing Your Firm’s Succession Plan, focus on succession planning for public accounting and consulting firms, but the techniques and principles we discuss are applicable to virtually all personal service businesses and many other organizations, as well.
We created this two-book series because we wanted one volume to cover fundamental succession and management concepts, so that every partner, as well as those in key leadership roles throughout the firm, could quickly and easily review the opportunities and obstacles the succession process creates. In this book, we keep the focus of the material at 10,000 feet—far enough away that we don’t get into the implementation minutiae, but close enough that the discussion points will resonate both at an organizational and a personal level. By getting everyone who will be involved in the decision making regarding your firm’s succession approach to read this, you should not only be able to more quickly discuss the various issues, opportunities, and ramifications of whatever decisions your firm makes, but also be able to cover them in a less personal manner (meaning the issues are raised as best practice ideas rather than someone’s personal preference or perceived entitlement). We created the second volume, Implementing Your Firm’s Succession Plan, for those who are charged with implementing the plan once your firm decides what that plan is going to be. This second book, a companion to this volume, delves into far more detail, providing strategies, tactics, action plans, and tools to help you complete each step in your plan.
Succession planning for personal service businesses, like CPA firms, can be more difficult than succession planning for other types of organizations. This is because a personal service business, by its very nature, depends on good, strong relationships with clients. By its nature, a personal service business is much more likely to be identified with the individual partner or partners, rather than with the firm itself; and the smaller the CPA firm and its clients, the more likely this will be the case. When you consider that out of some 44,000 CPA firms in the United States, 40,000 of those firms have 10 professionals or fewer, which translates to a significant number of small businesses that would identify with their specific CPA rather than the firm in which that CPA works. The more an organization can create an institutional identity and loyalty to that organization’s brand, the easier it is for changes to occur in ownership and management without affecting viability or future success. But real institutional identity and brand loyalty rarely occur in the smaller professional service organizations, creating greater risk in long-term viability when key partners transition out of the business. This is typically exacerbated even more when you consider how many small firms operate as solo practices where there are currently no candidates on board for internal succession.
Most professional service organizations have quite a bit of work to do to get ready for succession. Regardless of size, there are options available, and this book was written to help every firm think through its options and outline a plan to move forward.
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