Firms today are facing succession-planning issues at an unheard-of pace. Blame it on the Baby Boomers and the overall demographics of the accounting profession and the population in general.Over the past year I have worked with several managing partners in helping them transition from one set of leaders to another. The question I often get is, "When is the time right?" Managing partners decide to pass the baton to the next generation at different times. Some decide it's time when they are in their early or mid-50s, since they want to do other things in life. Others will hold on until the last possible moment. Some never make a transition.

Which one is right?

I can tell you for sure that the last option is not a good one for any multi-partner firm. Whether it should be an early retirement or one later in life depends a lot on the individual and, of course, the firm.

In short there is no simple answer to the question, "When should I pass the baton?"


The biggest problem that I see today is that some firms wait until it is too late. The managing partner becomes sick or disabled, or even dies. The firm is now forced to make immediate decisions on its future, rather than having a smooth transition. Partner squabbles become rampant, and in some cases the firm implodes. We all know that the value of a firm can disappear into thin air in a very short period of time.


1. Make sure that your partnership agreement addresses the issue of mandatory retirement from the partnership. Partners can continue to work, they just won't continue to have equity or share in profits.

2. Develop a policy for client transition. Many firms today require retiring partners to transition clients during their last three years with the firm. If they don't, their retirement payments are reduced. Also, make sure that the clients see themselves as clients of the firm and not of an individual partner.

This can be accomplished by rotating partners or having more than one partner involved with the client. Also, make sure that partners develop a transition plan for their key clients.

3. Introduce younger partners to the clients and involve them in special projects.

4. Make sure that your compensation plan does not penalize any partner for doing any of the above. If there is a conflict between what you want someone to do and how they will get paid, they will always do the things that support the compensation plan.

5. Have a partners' meeting on an annual basis that discusses succession-planning issues. Ask each partner when they plan to retire so that you get a clear picture of what might happen five, 10 or more years in the future.

6. Retirement is often scary. Don't ignore the emotional side of it. Be sensitive to retiring partners, especially to the managing partner.


Here are some things you should be thinking about as you approach retirement:

* What should I be doing?

* How can I best transition management of the practice?

* How can I best transition my client relationships?

* What do I need to do retain long-term clients for the firm?

* What am I going to do with the second half of my life?

* Do I feel financially secure?

* What future role do I want to play in the firm?

* How can I best help the firm be successful?

Remember - succession planning is a process and not an event. Start now by thinking about your future. A good succession plan should provide you with multiple opportunities.

Don't wait until it's too late. Start now.

August Aquila helps CPA firm leaders develop and implement succession, compensation, strategic and merger plans. Reach him at (952) 930-1295 or

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