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10 Immediate Actions to Optimize Firm Succession

Succession and practice continuity are burning issues for small and mid-sized accounting firms. While there is no one-size-fits-all solution, firms with revenues of $1M to $20M should be provoked by the current market conditions and put a plan together—now.


The following are real-time differentiators in todays’ intense M&A market:

  1. Investigate the viability and upside for a merger of equals. Bigger is better rings true in many cases. The closer a firm comes to being $5M and above, the more operational advantages are at hand.

  2. Explore joint ventures that will be the first stage to a combination. Be open to cross-border options with firms that are out of state but in proximity.

  3. Develop your own thesis on the advantages and disadvantages of Private Equity (PE). Some find PE is more appealing when joining a large firm that already has the PE infusion. Others find they are not a candidate based on size and restrictions. Still others find being a marquee to a PE either exciting—or questionable.

  4. Engage an expert to assess your firm and design a strategy to motivate successors to come to the table.

  5. Research what successors are looking for and determine how you can meet and exceed expectations.

  6. Clean up your shop. Profitability is a huge driver in the current market. Few firms want fixer-uppers. Fix your profitability as best you can to maximize appeal.

  7. Leverage infrastructure. The more you improve quality of life for your team, the wider your internal succession prospects become. Upgrade your technology budget and add operational support that can take low-end work off people’s plates.

  8. Consider non-equity and minor equity for talented people who bring experience, but have not passed the exam or do not qualify to pass the exam.

  9. Carve out practice components that are not viable for you moving forward—or that will not be appealing to successors. The client could be sold off before a transaction with a firm or in tandem.

  10. Broaden revenue sources. The less dependent on accounting personnel, the better. Create alliances for different services, get licensed to be in the investment business, and build a one-stop shop with a wider array of services.

Deal-making continues to get more complicated. The market is signaling that firms that are nimble, knowledgeable, and entrepreneurial will have better chances of succeeding.



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