Crafting a Succession Plan for a CPA Firm

By Courtney Rozen

Eight years ago, partners at CPA firm Kruggel, Lawton & Co. LLC in South Bend, Indiana, gathered around a table. All close in age, they faced a challenge: what would happen to their 90-person firm after they retired?

They weighed two options: lure a large firm to buy them or train replacements. They picked the second, and have since doubled their personnel, added three partners and delegated leadership tasks to younger CPAs, said Barry Hall, the firm’s managing partner.

At CPA firms like Kruggel Lawton, baby boomer-aged partners are preparing to clock out for good. Eighty-four percent of multi-owner firms surveyed in 2016 by the American Institute of CPAs said they believe succession will be a big issue for them in the next decade.

However, succession planning differs depending on the size of the firm. With the influx of retirees, CPA firm advisers and partners report that they are training future partners a few years in advance. They’re also writing agreements that include a mandatory retirement age, which is legal for executives or people in high policy making positions, and rules about how an outgoing partner must transition clients to work with their replacement.

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