Connect CEO Paul Tynan said succession and retirement planning for the accounting profession has never been more important as it is at present.
Unable to find a buyer, many public practice accountants will simply switch off the lights and walk away from their accounting practice into an uncertain and underfunded retirement future, warned Mr Tynan.
“Baby boomer accounting practice owners continue to get older and it’s important that their lifetime of work is seamlessly passed on to a new generation. However, the X and Y generations are not as keen to embrace ownership as past generations of accounting business owners have” Mr Tynan said.
“We are seeing fewer X and Y generation members wanting to move into business ownership for one main reason: this generation is burdened with debt. They have school fees, lifestyle expenses, house loan repayments, marriage costs, children to fund and, as a result, have no money left for business debt!”
Mr Tynan said this means traditional succession plans are no longer appropriate in many cases and accountants must rethink their options.
“Previously a public practice accountant’s succession plan would be to invite the loyal younger staff member to be partner. However, as mentioned previously, today’s young accountant is very reluctant to take on the burden of additional debt and related accompanying stress,” he said.
Despite this, Mr Tynan said there is still much value in accounting practices and principals who embrace the current environment can put themselves in a great position to capitalise on their hard work when it comes time to sell.
“Accountants hold a very powerful position in the eyes of their clients; however, far too many are unable to capitalise on this opportunity and their response is like a rabbit caught in the headlights of a car when it comes to change,” he said.
“Fortunately, there are accountants that are adapting quickly to the new era and moving to a more proactive way of doing business – far different from the traditional ‘reactive’ practices of the past.
“These businesses are thriving in the new world and act as a beacon attracting graduates, quality staff and clients, commercial growth opportunities and potential investors and buyers,” Mr Tynan said.