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More About This Title Securing the Future, Volume 2, Second Edition: Implementing Your Firm's Succession Plan
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Is your firm poised for long-term success and viability? Do you even know what that looks like for your firm?
The reality is that most CPA firms have their work cut out for them if they want exiting partners to retire comfortably and future leaders to flourish. In the new edition of this popular book, Reeb and Cingoranelli impart the same no-nonsense advice on succession planning and management that they share with their clients, providing you with the benefits of their years of experience, research, and methodologies.
Once your firm’s leadership is on board with the fundamental concepts, Volume 2 provides your implementation team with the tools and resources they need to make it a reality.
This workbook includes the tools, tactics, and strategies you need to draft a customized plan and see it through. Each chapter includes expert-developed exercises, forms, and checklists tailored to each phase of the planning process. Also available as a PDF Toolkit to simplify your planning!
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Bill Reeb has been consulting for over three decades to all sizes of businesses, from mom and pop operations to Fortune 100 companies. Prior to his life as a CPA, he worked for IBM in sales in the late 1970s. As an entrepreneur, he has founded seven small businesses, from retail to software development to advisory work. An award-winning public speaker, Reeb lectures throughout the United States. and Canada to thousands of executives and CPAs each year. As an award-winning author, he is internationally published, with numerous magazines, journals, newspapers, and books to his credit. Besides Securing the Future, Reed and his partner Dom Cingoranelli have also authored Becoming a Trusted Business Advisor: How to Add Value, Improve Client Loyalty, and Increase Profits.
Dom Cingoranelli is a consultant whose engagements over the last three decades includes organizational development work for CPA firms and associations, as well as on construction projects for the Big Three auto makers; for regional, national, and international contractors; and for organizations in a variety of other industries. He has performed strategy consulting and planning; process improvement studies; management consulting, training, and development; team building; coaching; and group process facilitation for a variety of groups. He co-authored Securing the Future and Becoming a Trusted Business Advisor: How to Add Value, Improve Client Loyalty, and Increase Profits, as well as the AICPA PCPS Succession Resource Center and Trusted Business Advisor Resource Center. Cingoranelli has also written numerous articles and CPE offerings on executive recruiting, performance management, leadership, planning, and organizational culture. He speaks frequently on management and consulting topics throughout the country.
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How to Use This Workbook 1
Organization of This Workbook 1
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 1 2
Dealing With the Barriers 2
The Barrier Scale™: Barriers to Overcome for Succession Planning 2
Getting Buy-In 5
Wrap-Up 7
Tools and Resources 8
Crisis Succession Planning Aid 8
Additional Learning Resources 8
Building Your Firm’s Robust Succession Plan 9
2 Developing and Implementing Your Strategy 11
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 2 11
Developing Your Plan 11
Monitoring and Accountability 12
Tools and Resources 13
Planning to Plan™ Worksheet 13
Additional Learning Resources 26
3 Monitoring Your Practice With Metrics 27
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 3 27
Benchmarks to Consider 27
Tools and Resources 29
Comments on Key Performance Metrics for CPA Firms 29
Marketing / Net Revenues 37
Technology / Revenues 38
Training (CPE) / Revenues 39
Billing Worksheet 41
Using the Billing Worksheet 43
Multipliers 45
Additional Learning Resources 46
4 Determining Which Business Model Your Practice (Mostly) Follows 47
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 4 47
Tools and Resources 48
Determining Your Present Business Model 48
Additional Learning Resources 50
Building Your Firm’s Robust Succession Plan 50
5 Exploring Valuation and Related Considerations 53
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 5 53
Using Book of Business as a Valuation Method 53
Use the Correct Type of Buy-Sell Agreement for Your Business Model 54
Buyout, Retirement, and Business Model 54
Using Multiple of Salary as a Valuation Method 55
Using Ownership Percentage Times Revenue as a Valuation Method 57
Tools and Resources 61
Additional Learning Resources 61
Building Your Firm’s Robust Succession Plan 61
6 Establishing Roles and Responsibilities 67
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 6 67
Client Classification Scheme 67
Marketing and Its Impact on Roles and Responsibilities 68
Client Relationship Management and the Marketing Component 68
Marketing—Active or Passive? 69
Active Marketing for “A” and “B” Clients 69
Marketing for “C” Clients 70
Dealing with “D” Clients 70
Rainmaking and the Referral Process 71
The Downside of Typical Rainmaker Models 71
Growth by Adding Rainmakers 72
Growth by Adding Infrastructure and Emphasizing Partners’ Roles and Responsibilities 72
Tools and Resources 74
Illustration of Partner Roles and Responsibilities 74
Illustration of Managing Partner Roles and Responsibilities 77
Partner Group Roles and Responsibilities 79
Tax Department Head Roles and Responsibilities 80
Policy Committee’s Roles and Responsibilities 82
New Client and New Work Acceptance SOP 83
Additional Learning Resources 85
Building Your Firm’s Robust Succession Plan 85
7 Establishing Voting Rights, Decision Making, and Equity Distribution or Redistribution Processes 91
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 7 91
Tools and Resources 92
Voting When a Partner Is Removed From the Vote 92
Equity Reallocation 93
Four-Step Process for Equity Reallocation 94
Additional Learning Resources 99
Building Your Firm’s Robust Succession Plan 101
8 Defining the Managing Partner Role 107
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 8 107
Structuring the Managing Partner Position 107
Tools and Resources 109
Chairman of the Partner Group Roles and Responsibilities 109
Additional Learning Resources 111
Building Your Firm’s Robust Succession Plan 111
9 Building Capacity for Long-Term Sustainability 115
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 9 115
Annual Performance Reviews Are a Waste of Time 115
Tools and Resources 118
What You Can Start Doing Now to Develop Your People 118
Examples of Competency Definitions 121
Example of an Action Plan 126
Additional Learning Resources 128
Building Your Firm’s Robust Succession Plan 128
10 Transitioning Client and Referral Relationships 133
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 10 133
Transitioning Relationships 133
Sample Transition Plan 134
Tools and Resources 135
Additional Learning Resources 142
Building Your Firm’s Robust Succession Plan 142
11 Defining Admission to Ownership and the Development Process 145
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 11 145
Knowing When and If to Admit Someone to Partnership—Remove the Guesswork 145
Getting Your Partners-to-Be the Development They Need 146
Tools and Resources 148
Sample Partner Competencies 148
Shareholder-in-Training Program Checklist 150
Admission of Non-Equity Partner Policy 154
Share Purchase Policy 154
Clarification of Non-Equity and Income Partner Status 154
Additional Learning Resources 155
Building Your Firm’s Robust Succession Plan 155
12 Dealing With Partner Departures 161
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 12 161
Tools and Resources 162
Policy on the Termination of a Partner 162
Separation or Severance 164
Additional Learning Resources 170
Building Your Firm’s Robust Succession Plan 170
13 Establishing Processes and Procedures for Retired Partners 175
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 13 175
Tools and Resources 176
Sample Terms for a Retired Partner Employment Contract Policy 176
Additional Learning Resources 178
Building Your Firm’s Robust Succession Plan 178
14 Defining the Maximum Payout Process and Other Buyout-Related Issues 181
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 14 181
What About Mergers and Sales? 182
Typical Acquisitions of CPA Firms 182
Typical Mergers of CPA Firms 187
Tools and Resources 192
Policies for Consideration 192
Maximum Payout of Guaranteed Payments for Retired Partners Policy 192
Sale or Upstream Merger of the Entire Firm Policy 193
Purchase Price of Other Companies Policy 194
Using the Transfer of an Accounting Practice Checklist 196
Transfer of an Accounting Practice Checklist 197
Sample Practice Summary for a Firm That Is Being Sold 200
Sample Mutual Confidentiality Agreement 201
Press Release Sample 202
Client Letter From the Mergee 203
Client Letter From the Mergor 204
Sample Letter Notifying Client of Change in Firms 205
Sample Letter Notifying Client of Change in Firms (Not Seeking Appointments or Meetings With a New CPA Firm) 206
Steps to Consider When Selling Your Practice 207
Additional Learning Resources 209
Building Your Firm’s Robust Succession Plan 209
15 Creating a Partner Accountability and Compensation Plan 213
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 15 213
The Managing Partner Goal-Setting Process—Detailed Steps and Samples 214
An Example of the Process 216
Conclusion of the Goal Process—Monitoring 221
Tips for Providing Performance Feedback 222
Tools and Resources 225
Steps Normally Required to Establish or Strengthen Partner Accountability 225
Sample Managing Partner Good Worksheet 226
Additional Learning Resources 226
Building Your Firm’s Robust Succession Plan 227
16 Addressing Death and Disability in Your Buy-Sell and Retirement Policies 229
Key Themes from Securing the Future, Volume 1: Building Your Firm’s Succession Plan, Chapter 16 229
Tools and Resources 230
Sample Terms for a Policy Addressing Partner Death or Disability 231
Additional Learning Resources 233
Building Your Firm’s Robust Succession Plan 233
17 Conclusion 235
It’s About Choices 235
It’s About Success, Not Perfection 236
Things Change 236
Enjoy the Journey 236
