CPA Firm Succession
According to 2012 PCPS (succession survey), nearly half of the CPA professions were in merger discussions or plan to merge in the next two years. Fueled primarily by demographics and other succession issues, this trend may serve to balance the current sellers market. As more and more practices look to exit, there will be a shift from more buyers to more sellers. The baby boomer population is getting ready to retire and the baby boomer CPAs are no exception.
For the smaller firms in large metro areas, there is still a sellers market. There is a plethora of firms seeking to buy smaller competitors and this provides the seller of a small practice multiple opportunities for exit.
For the larger firms without a true succession plan in place, the options are smaller. Mid-sized to large firms are finding they do not have the young talented partner with which to execute a succession plan; this is part of an overall demographic issue we see in the industry today.
We know that the succession situation will continue to evolve over the next few years and we will continue to update but consider these staggering figures when deciding when it is best for you to consider succession planning or exit:
- Nearly 80% of the CPA firm’s owners surveyed expected succession to become a major issue for their firms in the next 10 years.
- Fewer than 50% of multiple partner firms have a written succession plan
- Fewer than 25% of smaller firms (3-7 professionals) have any succession plan
- Fewer than 14% of firms with one or two professionals have a succession plan
Sources: 2012 PCPS Succession Survey conducted along with the AICPA