Planning for the future is not easy.
When you add family to the mix it can get quitecomplicated. Succession planning that will determine the future of a CPA firmremains a challenge for many accounting practices - particularly when family isinvolved.
"While I see more firms addressing the successionissues than before, it's still not close to where it should be," said JoelSinkin, president of Accounting Transition Advisors, a New York-based firm thatworks with accounting firms in the area of mergers and transitions. "Ispeak with firms on a regular basis who think they are in a position to addresssuccession internally, [but] I see as being very unlikely."
According the 2008 PCPS Succession Survey released by theAmerican Institute of CPAs, Sinkin isn't off base in his assessment.Thirty-five percent of multi-owner firms had written a formal succession plan,and only 9 percent of sole proprietors had one in place, compared to 25 percentand 8 percent, respectively, in 2004.
Sinkin said that though he facilitates upwards of 50transitions a year, generational successions are still in the overwhelmingminority.
And those who are doing it are doing it any way they can,as there is no single formula for ensuring a successful generationaltransition.
We talked to a handful of CPAs facing these issues,whether as the second generation taking over for a parent, or as a patriarchleaving their firm after a career.
Robert Minkler Jr.: Taking the managing partner reins
In January, Robert Minkler Jr. was named managing partnerof Anders Minkler & Diehl in St. Louis. He succeeded his father, RobertMinkler Sr., who served in that role for 40 years, up until 2004. The new gigwasn't planned, Minkler Jr. said, it just happened to work out that way.
The younger Minkler spent five years atPricewaterhouseCoopers in Chicago before coming to his father's firm in 1996.In 2004, the partner group felt that there wasn't a frontrunner ready to takeover as managing partner. And the firm itself wasn't ready for one person tostep in to succeed his father.
"It was a combination of things," the sonrecalled. "We have a diverse age group of partners, most of the seniorpartners were too involved in client work to really give that up at the time,and then some of the younger partners weren't ready. I was partner for a yearand wasn't even close to ready. We thought what would work was a transitionperiod."
Ultimately, the partner group - which had 10 members atthe time - would elect a three-person executive committee. That committeeincluded his father and two other partners in the firm. "So it wasn't likepulling a Band-Aid off," he said.
Fast forward to early 2007, the firm decided Minkler Sr.should become an ex-officio member of the executive committee. They alsodecided to elect a third member and Minkler Jr. took that spot.
"During that time, I wasn't thinking and I don'tknow if anyone was thinking that I would be the one to eventually take over asmanaging partner," Minkler Jr. said. But eventually, the slow-movingcommittee governance structure took its toll and in 2009, firm members werelooking for something more efficient and timely when it came todecision-making.
A two-stage plan went into effect as a result: MinklerJr. was appointed as the executive committee chairperson and would take overthe day-to-day decision-making, and then in two years, the firm would re-assessthe need for a managing partner. The firm didn't need two years, as the youngerMinkler was elected managing partner in January 2010. The firm kept itsexecutive committee with elder Minkler still in his ex-officio role.
"I reflect on it now and it almost looks like weplanned it this way, but we didn't," Minkler Jr. said. "Allthroughout my time here we have gone out of our way to make sure there is nofavoritism played. I never wanted anybody to think it's pre-ordained orsomething that I deserved because of my name. I truly believe I'm the rightperson for the job."
Still, Minkler Jr. acknowledges the power of taking overa firm his father built and started. "I get the chance now to lead andit's somewhat overwhelming," he said. "It's a greatopportunity."
Bill Rush Mosby: 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 amajority of his clients to his son, Sim, and is in the office every day exceptThursday afternoons, when he plays golf. Otherwise, he's answering e-mails andworking with one of his 500 clients.
It's a big book of business for a small-town CPA, buteverybody knows Mosby. After all, he just celebrated his 50th anniversary withthe firm in June, and he's become an institution to the mom-and-pop clients heserves.
But the transition hasn't been so easy.
Mosby, who says he's shifting 85 to 95 percent of his taxclients 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, butit's probably my fault because I'm not quitting," Mosby said. "Theclients don't have to switch if I'm here, and it's hard to switch them if I'mpresent. So we're gradually doing it."
Mosby wanted to give his clients to his son, one of thefour partners in the firm, because "it made sense" and it was commonknowledge that it would happen eventually. Kinship aside, Sim Mosby is theyoungest partner and the others already have substantial practices of theirown.
"We're picking up the pace now because I'm gettingolder and he's taking over more and more," he said. "Truthfully, I'mnot doing that much now, I'm doing estate tax returns for clients I've beendealing with for a long time. I'm not trying to start something new. I'mpassing up opportunities to even do additional work for existing clients."
Still, Mosby admits that he doesn't want to leave,although he recognizes that it may cause some awkwardness as his son tries tofill his shoes. And he's conscious of having two people serving clients thatreally 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 aload, but he doesn't know what a load is like until he gets mine too. I'mlooking after small individual tax returns, but there are a lot of people andpersonalities involved, and that's what makes it awkward. If I had, instead of500 [clients], 50 that were 10 times as big, you know ... but that's not theway it is in a small town."
Robert O. Mayer: Once reluctant, but now proud
When Robert Mayer's son Stuart first talked aboutbecoming a CPA during his school years, Robert wasn't excited about the idea.Mayer, who is managing partner at Mayer & Co. in Woodbury, N.Y., started inpublic accounting at Arthur Andersen then went to Holtz Rubenstein Reminickbefore entering private industry for 10 years. When he left the private sectorhe started to build his own firm, and it was at that point that Stuart was inhigh school, taking bookkeeping classes and becoming proficient with computers.
"He showed an interest in becoming a CPA," theelder Mayer said, adding that his wife is also a CPA. "It was nice whensomeone wants to follow in your footsteps, but they should really make up theirown mind based on the right decisions."
Mayer's son secured an internship with a partner atPricewaterhouseCoopers' Long Island office during his senior year in highschool. The experience prompted him to apply to business school and intern withthem during the summer following his junior year of college. Upon completion ofthe internship, he landed a position with PwC to begin after his graduation.Mayer told his son that he had to work somewhere else to get more auditexperience before he could work in his firm.
"He went and worked on some very large audits andultimately he decided PwC was not an entrepreneurial environment and he wantedto come join the firm," Mayer said. "The partners wanted him to joinmore than I did and they figured he would be my ticket out - he would buy myinterest or I would give it to him."
Stuart did not join as a partner; he came in as a staffmember and started generating more business for the firm, working with thepartners in the firm's various New York locations.
Though Mayer said that he has a close relationship withhis son, he had some reservations for him coming onboard. "Sometimesfamily being in business is not always the best thing. Not that I have had thatexperience," he said. "I have dealt with it on the other side as abusiness advisor to many clients that are multi-generational. But he came andhe worked very hard. The staff had tremendous respect for him and he wasbasically in charge of making us paperless. He became partner based on bringingin clients."
At that point, the firm had three partners - Mayer andtwo others who have since left the firm. As a result, Mayer and his son thendecided to bring on a staff member who had been with the firm for 12 years aspartner. They sat down to talk about the future of the firm, yet at that point,the decision had not been made that Stuart would be groomed for managingpartner. They revisited their partner agreement - which called for retirementat 65 - and although Mayer is only 58, both agreed they didn't want his leavingto be a forced retirement.
"I have seven years, but I would prefer that when Iget to be 60 he actually does fill the role of managing partner," Mayersaid of his son.
Mayer's daughter Hayley also works for the firm - at itsNew York City office - as the director of lifestyle management. The family hasa rule: at family get-togethers, there's no talk of business.
"I'm a very proud father," he Mayer said."I will say, and he will say, obviously it's easier to step into somethingthat was a business and that had a good reputation in the banking community.But at the same time, clients just don't come to you. You have to be out thereand get it."
Jody Padar and Jason Blumer: It's not their father'sfirms
Jody Padar and Jason Blumer built a friendship after theyrealized they were both going through a similar situation in taking over theirfather's firms.
"I just joined Twitter and was tweeting and Jasonand I were going back and forth," said Padar the managing shareholder atJames 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 myposition at all in terms of a young person leading a firm in my area."
It was back in November that the pair had their firstphone call and that resulted in subsequent conversations about how they wererunning their respective firms. Padar liked what she read on Blumer's blog,about the importance of process in management.
"You can find other people in our Generation X, I'm39, she's 38, who are taking over their parents' firm, but its hard to findsomebody who is taking it over, wanting to do things that are innovative:brand-new cloud-based stuff, a heavy focus on process, looking at differentways to manage relationships and deal with remote clients," said Blumerwho is managing shareholder of Blumer & Associates in Greenville, S.C.
Though Blumer and Padar have a lot of commonalities inthe way they want to manage and grow their firms, their stories on how they aretaking over their fathers' firms are quite different.
For one, Padar's dad is still working in the firm. Thoughhe founded the firm, it was always a side job for Matousek, as he was thedirector of tax for Midas International for 35 years. When Padar came on board,she made the firm into a full-time, year-round enterprise.
"He's having a hard time letting go per se eventhough he really wants to," Padar said. "We have a three-year planand we are in Year Two right now. He'll never go away and I really don't wanthim to, I just don't want him to have the responsibility on his shoulders so hefeels like he has to come to work."
Blumer's father, on the other hand, though he founded thefirm and will be a partner until early next year, left before he hit retirementage and handed the reins to his son.
"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 dealwith junk anymore. I imagine when I'm 75 or 80, whenever I'm leaving the firm,I'm going to be the same way. I think the older generation seriously needs somecounsel, especially when it's your kid. It could blow up or be reallygreat."
Padar's dad will be joining her and Blumer in Las Vegasin November for Accounting Today's Growth & Profitability Conference(http://www.webcpa.com/conferences/GP/). He's scheduled to moderate a Q&Asession called "You Have Your Dad's Firm, Now What?" with Padar andBlumer, where they'll speak on a handful of topics, such as community learningin person and on the Web via social media; value billing, how it affectsclients and how to implement it in your firm; and the benefits ofSoftware-as-a-Service technology and how it will help client processimprovement. The duo will also talk about client selection, making sure aclient fits with what is being done in the firm and how to fire a client ifit's not working out.
"I imagine in the next five to 10 years there willbe a pretty good shakeup in our industry," Blumer predicted. "Itneeds to happen and it's going happen. When older partners start transitioningin younger partners, they are going to bring them in the way they were broughtin the 1960s and that's boring. Those are broken models."
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