Succession planning to determine thefuture of a firm remains a challenge for many accounting practices - particularly when family is involved.

"While I see more firms addressing the succession issues, it's still not close to where it should be," said Joel Sinkin, president of Accounting Transition Advisors, a New York-based firm that works with accounting firms in the area of mergers and transitions. "I speak with firms on a regular basis who think they are in a position to address succession internally, [but] I see it as being very unlikely."

According the 2008 PCPS Succession Survey from the American Institute of CPAs, Sinkin isn't off base. While 35 percent of multi-owner firms had a formal succession plan, only 9 percent of sole proprietors had one, compared to 25 percent and 8 percent, respectively, in 2004.

Sinkin said that though he facilitates upwards of 50 transitions a year, generational successions are still in the overwhelming minority. And those who are doing it are doing it any way they can, as there is no single formula for ensuring a successful generational transition. We talked to a handful of CPAs facing these issues to get their take.

TAKING THE REINS

In January, Robert Minkler Jr. was named managing partner of Anders Minkler & Diehl in St. Louis. He succeeded his father, Robert Minkler Sr., who served in that role for 40 years, up until 2004. The new gig wasn't planned, Minkler Jr. said, it just worked out that way.

The younger Minkler spent five years at PricewaterhouseCoopers before coming to his father's firm in 1996. In 2004, the partner group felt that there wasn't a frontrunner ready to take over as MP. "Most of the senior partners were too involved in client work to really give that up at the time, and then some of the younger partners weren't ready," the son recalled. "I was partner for a year and wasn't even close to ready. We thought what would work was a transition period."

Ultimately, the partner group - which had 10 members at the time - elected a three-person executive committee, which Minkler Jr. joined in early 2007.

"I wasn't thinking - and I don't know if anyone was thinking - that I would be the one to eventually take over," Minkler Jr. said. But eventually, the slow-moving committee governance structure took its toll and in 2009, firm members were looking for something more efficient and timely when it came to decision-making.

A two-stage plan went into effect as a result: Minkler Jr. was appointed as the executive committee chairperson and would take over the day-to-day decision-making, and then in two years, the firm would re-assess the need for a managing partner. The firm didn't need two years: The younger Minkler was elected managing partner in January 2010 - though the firm kept its executive committee.

"It almost looks like we planned it this way, but we didn't," Minkler Jr. said. "All throughout my time here we have gone out of our way to make sure there is no favoritism played. I never wanted anybody to think it's pre-ordained, or something that I deserved because of my name. I truly believe I'm the right person for the job."

FINDING IT HARD TO LET GO

Bill Rush Mosby isn't quite ready to stop working. At 73, the former partner at Silas Simmons in Natchez, Miss., is transitioning a majority of his clients to his son, Sim, and is in the office every day except Thursday afternoons, when he plays golf. Otherwise, he's answering e-mails and working with one of his 500 clients.

It's a big book of business for a small-town CPA, but everybody knows Mosby. After all, he just celebrated his 50th anniversary with the firm in June, and he's become an institution to the mom-and-pop clients he serves.

But the transition hasn't been so easy. Mosby, who says he's shifting 85 to 95 percent of his tax clients to his son, who is 41 and has been with the firm for 20 years himself, said that letting go and stepping back has had its challenges.

"It's not working as fast as I wanted it to, but it's probably my fault because I'm not quitting," Mosby said. "The clients don't have to switch if I'm here, and it's hard to switch them if I'm present. So we're gradually doing it."

Mosby wanted to give his clients to his son, one of four partners in the firm, because "it made sense." Kinship aside, Sim Mosby is the youngest partner, and the others already have substantial practices of their own.

Still, the elder Mosby admits that he doesn't want to leave, although he recognizes that it may cause some awkwardness as his son tries to fill his shoes. And he's conscious of having two people serving clients that really require only one. "His wagon is fixing to get loaded real quick," Mosby said of his son's client base, with a laugh. "He thought he had a load, but he doesn't know what a load is like until he gets mine too. ... If I had, instead of 500 [clients], 50 that were 10 times as big, you know ... but that's not the way it is in a small town."

NOT THEIR FATHERS' FIRMS

Jody Padar and Jason Blumer built a friendship after they realized they were both taking over their fathers' firms. "I just joined Twitter and was tweeting and Jason and I were going back and forth," said Padar, the managing shareholder at James J. Matousek in Mount Prospect, Ill. "I looked at his blog [www.thriveal.com], found out he was taking over his dad's firm and said, 'Hey, call me, I'm taking over my dad's firm and need support.' Nobody else was in my position at all."

"You can find other people in our Generation X, I'm 39, she's 38, who are taking over their parents' firm, but it's hard to find somebody who is taking it over, wanting to do things that are innovative: brand-new cloud-based stuff, a heavy focus on process, looking at different ways to manage relationships and deal with remote clients," said Blumer, who is managing shareholder of Blumer & Associates in Greenville, S.C.

Though Blumer and Padar have a lot in common, their stories on how they are taking over their fathers' firms are quite different.

For one, Padar's dad is still working in the firm. "He's having a hard time letting go, even though he really wants to," she said. "We have a three-year plan and we are in Year Two right now. He'll never go away and I really don't want him to, I just don't want him to have the responsibility on his shoulders so he feels like he has to come to work."

Blumer's father, on the other hand, though he founded the firm and will be a partner until next year, left before he hit retirement age. "My dad was ready," Blumer said. "He said, 'Go knock your bad self out and I'll see you later.' He didn't want to deal with junk anymore."

Blumer predicts a shakeup in accounting in the next few years: "It needs to happen and it's going happen. When older partners start transitioning in younger partners, they are going to bring them in the way they were brought in in the 1960s, and that's boring. Those are broken models."

For more firm succession stories, and tips on passing the baton to family, see the unabridged version of this story on AccountingToday.com.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access