The complexities of succession are significant no matter whether the route you take is internal or external. Either scenario requires a significant time investment, and each one has different features with associated levels of change and adjustment. However, regardless of where they come from or how they got there, CPA firm successors share common ground in the 5 priorities below.
Money: External successors and internal successors both want to understand how they will make money. Internal successors may see the dollar signs accruing from the terms of the buy-in, plus the flexibility to cut clients and streamline operations. External successors will see the upside coming from cost savings, new services, efficiencies, and better talent.
Data: Decisions will be dependent on meaningful and accurate engagement performance data and overall financial consequences. Internal successors need to have access to data well before they are presented with an offer to buy. External successors need a comprehensive package of data well before due diligence.
Culture: Comfort with transparency, decision making, and personnel policies is essential for any succession. Internal successors have to feel that the firm is moving in the right direction, and that they will have a real impact. External successors need to see synergies, and the ability to build a better environment collaboratively and collegially.
Future: All successors are motivated by the future – the more potential, the better. Both internal and external successors must be provided with adequate information and the opportunity for exploration to allow them to gain a realistic plan for future success and future rewards.
Roadblocks: Cooperation is the key to a successful transition. Push-back on how the process will happen, and/or an inclination to micromanage the transition process, will discourage potential successors coming from outside or in. Facilitating introductions, volunteering ways to stimulate relationships, and implementing ways to bond clients to the firm (and not the individual) will bring successors great comfort.
CPA firms are businesses. Successors will have their own view and preferences for running their business. Whether you are dealing with internal or external succession, recognize that business people will have common priorities and different preferences. Understanding this at the start will help pave the way for a smooth transition.