Succession Planning for CPA Firms

Today I had the opportunity to attend the Cal CPA Torrance Area Discussion Group.
The topic was "Succession Planning: A Balanced Approach" with Jonathan Karp, Esq., CPA (inactive) of Reish & Reicher and Mark Fowler, CPA (inactive), CMC of Stowe Management as the speakers.


I have had the privilege of hearing Jonathan Karp speak on this topic at previous meetings of the Cal Society of CPA's and each time the information was outstanding.  This was however the first time I have been able to hear Mark Fowler speak on the topic.  


This topic is especially important as we emerge from this recession and firms resume succession plans that had been put on hold in 2009.  From 2003-2008  succession planning had consistently ranked in one of the top 2 issues facing CPA firms (According to the PCPS Survey).  - staffing was the other issue ranking in the top 2 each year.



Both Mark and Jonathan are experts on the subject of succession planning for CPA's and CPA firms as they have both been involved in countless transactions involving mergers / acquisitions and firm buy sell agreements and succession planning for CPA's and CPA firms.


The material presented was informative and comprehensive.  I have been to many continuing education seminars that simply lacked content and relevance.  This was the exact opposite.  


Mark led off by giving an introduction to succession planning and discussing the 3 basic approaches.

• Internal Succession Planning - this involves selling the practice to other partners or employees
• External Succession Planning - selling the practice to a third party or merging the practice
• Dissolution - a carefully crafted divorce agreement

His presentation included 2 relevant case studies of transactions he helped orchestrate.
The highlight was his 6 key points of the "process".

1. Attracting and retaining the right people
2. Constantly developing new services
3. Developing a formal sales and marketing program
4. The shift from a 'practice mindset' to a 'firm mindset'
5. Developing ownership scenarios
6. Focus on ownership transition

Jonathan's presentation was a great compliment to Mark's.  Jonathan discussed in more detail the different methods of succession and why firms might employ one versus another.   His presentation was very comprehensive and covered benefits of each methodology as well as potential pitfalls.  Time was spent on determining how a practice is valued and the current outlook for potential buyers and sellers.


Jonathan included real world examples from transactions he has handled.  Among clients of mine who have worked with Mr. Karp, he is considered THE attorney to use in any professional services firm buy / sell / merge transaction or succession planning.


There was far too much information to try to cram into this 2 hour presentation.  The handouts were over 50 pages and not all of the information was covered. 


Mark announced that he will be giving a presentation in June at the Cal CPA MAP Committee meeting in Los Angeles.  The topic is one that is near and dear to my heart - How To Recruit, Retain and Mentor Staff.  The meeting will be at 8 a.m. on June 16th 2010.  This group is Co-Chaired by Jonathan Karp and is very well attended.  I plan to be at this presentation as well as the May 26th meeting which is the Annual Compensation & Benefits Survey Meeting.  This will be my 7th year attending the annual event which is always standing room only.  Last year the survey had 60+ participants and I am sure this year will be similar.  Moderated by Jonathan Karp, this meeting goes over in detail the results of the survey covering salaries and benefits.  the timing is perfect as firms prepare for their annual employee performance reviews.


Jonathan will also be leading a discussion on the survey - a conversation in which I am an active participant bringing real time information on salaries and trends I am seeing in the market.


From what I hear limited space is still available, if you would like to attend, contact DJ Intal at Reish.  310-478-5656 x 251


The meeting will be held at 
Reish & Reicher
11755 Wilshire Blvd, 10th Floor 
Los Angeles, CA 90025