PwC partner Sanjiv Jeraj told Accountants Daily that while selling their practice to a larger firm is a good succession plan for many small accounting practices, many leave it too late to begin the process.
“Sometimes accounting firms come and see us and the owner is already in their 60s and we think 'if you're in your 60s and we buy the business and then you've got to transition it, then you've left it too late',” he said.
“My view would be that accounting firm owners who are in their 50s should [start thinking about it] because the buyer will want a long transition, so therefore think of it when you're in your 50s not in your 60s or 70s.”
Another area of contention is over unrealistic payment expectations, according to Mr Jeraj.
“Sometimes we see accounting firms come to us wanting to be paid all up front and we say no because if we do that then they might leave and take the clients with them because the clients are always very much tied to their trusted adviser,” he said.
“These small accounting firms need to realise that the trusted adviser relation needs to transfer from them to us, and therefore simply selling and walking away is nonsensical.
“We are astounded by accounting firms that think they can do that. The smaller accounting firms need to think that through, get a bit more realistic on price, and of course get more realistic about the structures that they propose for sale.”
The not-to-be-missed Accountants Daily Strategy Day will travel through Melbourne and Sydney in August to equip accounting professionals with the latest industry updates and tips for modern practice management as well as the latest cutting-edge technology, processes, strategies and trends shaping the future of accounting. Visit the website for more information: www.accountantsdaily.com.au/strategy-day