Succession Planning Calculator: Sole Practitioner Meets with Clients Rarely if Ever

The minimum time in advance of the date for slowing down we recommend for sole practitioners with Partner Loyal clients who rarely see their clients is one year. If you are in a sparsely populated area, have a unique niche, require a unique skill set or language or other such mitigating factors, you may need 2 to 3 years.

Succession Planning Considerations

The fact you rarely see the bulk of your clients means that in most cases your relationship is not as intimate as it would be if your clients were meeting with you face-to-face regularly. Your clients likely still depend on you as their trusted advisor so you cannot ignore the fact they need to be weaned. A one year transition plan is likely adequate in your case.

The transition plan should include:

  • Clear communication of specifically what person will be your successor and a message from that person welcoming the clients
  • Emphasize to the client that everything you were capable of, the successor is capable of, even more.
  • Highlight what the client is gaining from the successor, not what the client is losing from you.
  • Affirm for the clients what will change and what will not change
    • Minimize the changes if possible
    • In addition to a change in who will work with them, clients are mostly concerned with fees, what services will be provided and how, and convenience
    • Package any necessary changes as positive
  • Gradually over the transition year you should back away from being the go-to person

If the type of service you provide is a specialized niche, or requires unique skills, or a special license, you likely need additional time to find a successor with these attributes.

  • Therefore, it may take you longer to execute transition plan.
  • Other examples that can result in longer lead times are client bases with special needs such as language requirements. 

In addition, for most sole practitioners:

  • The successor will likely come from outside your firm and transition will often follow a merger or sale of your firm with another firm. That means the clients often have no history with the likely successor to the trusted advisor. If you are lucky, and you prefer an internal approach, you be able to hire or promote someone to take over and the transition. 
  • Succession requires a more deliberate approach than an internal succession in a larger firm with ready-made internal replacements requires.
  • Local market - If you are in an area of the country that has a plethora of accounting firms, finding a successor will be far less daunting compared to a market that has very few local firms as potential successors. If you are in a market where there are a limited number of potential successors, once again you should assume it may take you longer to identify your successor and you should consider commencing your transition plan sooner.
  • Long-term lease commitments are a major obstacle for firms seeking a sale or merger to execute a succession plan
    • The best case scenario is avoiding a long-term lease. That may only serve to extend the time you can start to execute your succession plan.
    • When you commit to a long-term lease, you reduce the amount of potential successor firms who will consider you.
    • A successor firm may reduce their offer to you by the additional costs of retaining this additional overhead if they are willing to assume the lease.
  • Name of the successor firm-Your name has likely been a prominent part of your brand for years. This often leads a selling practitioner to request their name be retained in the name of the successor firm.
    • Reality is the name of the successor firm is not important to most clients.
    • What is important to clients is feeling the professional they have worked with will still be there managing their account, the fees will remain the same, and that the office remains geographically convenient if they are accustomed to meeting at your office.
    • Your active involvement in the transition is far more important to your clients than having your name on the door. 
  • Terms that don’t work- While you, the seller, need to be paid for your years of sweat-equity, buyers don’t do deals to lose money. You need to be realistic that the buyer is unlikely to do a deal that is not profitable to them even while they are paying you for the practice.