The firm’s national chairman Kim Hutchinson said he expects somewhere around 10–20 per cent of partners industry-wide to retire in the next five years, a statistic he says is reflected in RSM Bird Cameron’s own partnership.
For larger and non-goodwill practices, succession is simply a matter of replacing talent with talent but smaller goodwill firms face additional challenges, Mr Hutchinson said.
“Their biggest challenge will be their ability to sell the goodwill to the next generation coming through,” he said.
The younger generation want to do other things in their lives rather than taking on a large debt to buy into an accounting practice, Mr Hutchinson added.
“I suspect what we are going to see is an interesting equation between those that want to get out and those who want to become partners.”
“Many of those looking to get out over the next four or five years are the same people who purchased goodwill 10, 20, even 30 years ago and their mindset is that these practices are worth something … I suspect that the next generation will be a bit more reluctant to jump into this kind of stuff. I think there will be some interesting dynamics at play,” he said.
For practice partners wanting to sell out, larger firms looking to expand may be the best option, according to Mr Hutchinson.
In 2013 RSM Bird Cameron bought out a three-partner Brisbane firm MHM Accountants in a strategic move to enter the Brisbane market, he said.
“Two of the partners there are 57 and 58 and they were happy to come into our partnership for three or four years to get their clients bedded down, get their staff bedded down – it gave them the exit strategy ... That’s a perfect example of how it can work for both parties.”
Hayes Knight joint managing director, Greg Hayes recently told AccountantsDaily he expects to see a greater trend toward consolidation within the industry as older sole practitioners look to get out and large firms seek critical mass.
Mr Hayes said Hayes Knight is in continuing discussions with a number of smaller firms but he was not at liberty to discuss any details.