Art of Accounting: My Wife Asked, 'What Do I Do if You Get Killed?'
IMGCAP(1)]One morning my wife and I were having breakfast and she asked me, “What do I do if you and Peter get killed?”
This was a Friday and Peter Weitsen and I were flying together on Sunday to a conference in Palm Springs. My response to these questions was typical: “Don’t bother me. Nothing will happen!”
When I got to the office, I spoke to Peter and repeated my wife’s concerns, which were reasonable and important for us to consider. At that time we were two partners with a staff of four. We discussed it and decided we needed to make arrangements to have the practice continue and sold if the unthinkable occurred. The process was pretty easy—we each compiled a list of firms we could make arrangements with, discussed our options and decided upon a local firm that was about four times our size that seemed like the right fit. I called the managing partner, Danny Mironov, and asked him if they would be willing to acquire our practice if we both were out of the picture. He said yes and that we should draw up an agreement. He would review and sign it, which we did. He signed the document and returned it to us. We quickly made up a list of our clients, the service and fee arrangements, and other important information a successor should know.
When Peter and I each went home that night, we gave our wives a sealed envelope telling them to open and follow the instructions ASAP if we both were killed. Thankfully, those envelopes were never opened.
That was many years ago. A few things flowed from that:
1. We developed a prototype of the price and terms that we were willing to sell our practice for if we were suddenly gone. We have since signed similar agreements with other firms to acquire them under like circumstances. Again, thankfully it never happened.
2. We have since made that prototype available (for no charge) to over 10,000 accountants in solo and small practices. You can download the document by clicking on PracticeContinuationDocument2.doc below the author bio.
3. While this happened over 25 years ago, the Mironov firm has had its own transition with two other managing groups succeeding Danny. As of January 1st of this year, the 55-person firm merged into Withum and we are part of the same firm. FYI: Danny’s successors have acknowledged their acceptance of the agreement, which was vitiated when we merged into Withum over 11 years ago.
This is a crucial area and it would be irresponsible for small firm owners to not make such arrangements, which are not binding, are completely confidential and have no effect while you are alive and kicking.
Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People List. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, published by www.CPATrendlines.com and “Managing Your Tax Season, Third Edition,” published by the AICPA. Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 964-9329 or email@example.com.