Succession Planning Toolkit Launched

Beyond Numbers, Nov 2005 by McRae, Michelle

Back in 2002, we raised the spectre of succession planning in our May cover story "Succession and the CA Practitioner"-pointing to the large number of public practitioners approaching retirement and the shortage of younger CAs coming up to fill the ranks. Advising practitioners to take an active stance, Doug Wallis, CA, then the ICABC's director of practice advisory services, cautioned: "... you can't plan your succession too early. If you don't already have a plan in place, start now."

The urgency of this issue has only intensified in the past three years, and it will only continue to intensify as more and more baby boomers hit retirement age.

The statistics are staggering. According to a succession planning survey conducted by the CICA in May of this year, 70% of respondents (sole-practitioners and partners of small and medium-sized firms) expect to retire from their practice within the next 15 years, but 99% of sole-practitioners and 64% of small and medium-sized firms do not have a formal succession plan.

In our 2002 article, Doug Wallis urged practitioners to plan on funding their retirement by other means than simply selling their practices. Yet the CICA's 2005 survey reveals that selling the practice is still the primary exit strategy for most practitioners, with 34% of sole-practitioners and 72% of small and medium-sized firms expecting to sell their practice (or share of their practice) on retirement.

While the stats paint a troubling picture, the profession is taking steps to help mitigate the problem. One such step is the release of the Succession Planning Toolkit - Leveraging a Life's Work, a book specifically designed to help public practitioners plan for their succession.*

The author of the toolkit is Steve McIntyre-Smith, Ph.D., MIDM, whose article "Practising Succession Planning" appeared in the August 2005 issue of CAmagazine. As an author, seminar leader, and someone who has experienced both sides of the transaction equation-buying and selling CA firms-Steve has a lot of experience in this area.

He says the idea of creating resources to help CAs with succession planning first occurred to him 20 years ago. While buying and selling several practices and blocks of fees during the 1980s, he often found himself searching "high and low" for resources. Never finding any, he began to consider creating these resources himself.

Fast-forward to 2004, when the CICA approached him to create succession-planning checklists for public practitioners. Describing it as an "ideal fit," Steve was up for the challenge.

It proved to be no small task, however, and as he set about creating the checklists, Steve soon found himself amassing more and more information.

"There was so much information I thought could be of benefit to CAs," he explains. "I wanted public practitioners to have the tools to formulate deals with the terms, timing, and price that's right for them. I wanted them to be able to create a well-mapped plan for achieving their dreams for the future."

The project ultimately evolved into the Succession Pknning Toolkit, a comprehensive guide that comprises three modules:

* Getting Started provides practitioners with practical strategies for identifying options and making the right decisions as they start planning for the future;

* Getting Ready (A Guideline to the Next Five Years) guides practitioners through the process of proactively creating a plan to maximize the value of their practice; and

* Making Your Move offers practitioners real-world advice on identifying and attracting the right buyer, while balancing the needs of an ongoing practice.

In addition to these three modules, the toolkit also provides six case studies, several checklists, and some self-assessment forms.

Given the statistics, the author knows the publication comes at a crucial time. "If they don't take early steps now, practitionersparticularly those with sole and small practices-will only hurt themselves later," he says, echoing Doug Wallis's earlier warning.

At the same time, Steve understands the obstacles that prevent practitioners from planning ahead. He cites procrastination as a big problem, but also acknowledges that many people simply don't know where to start.

"A public accounting firm is a very complex business, with a variety of services being provided to a variety of clients," he says. "A lot of practitioners who've had their firms for 20 years or more can get tunnel vision. Many don't know who's out there-both in terms of competitors and potential buyers."

He also identifies an emotional barrier.

"Let's face it," he says, "planning your succession is a bit like planning your will. It seems to suggest your inevitable demise."

The toolkit addresses these issues and provides step-by-step guidance to make the process less daunting. To that same end, Steve recommends that practitioners who feel overwhelmed start by taking just one small step, because "investing even a small amount of time and energy now will pay off down the line."

Asked to provide an example, Steve cites the "old 80-20% rule-80% of revenues from 20% of clients, with a different 20% of clients causing all the grief." He urges practitioners to identify the 20% who cause all the headaches and consider dropping them.