No practice continuation plan? No practice.

• Author: Sample, Jerry
• Position: A Wake Up Call - Importance of succession planning

It's really pretty simple. Without a practice continuation plan, a month after you suffer a disability, illness or worse, die, the value of the practice you spent a career building will have plummeted. And two, three, four months later (if you're still around) you might be ready to hop back in the saddle, but your clients will be gone.

You're getting older and the profession has seen a dramatic reduction of CPA candidates over the last 20 years. This reduced pool of likely buyers means less demand for your firm should it come time to sell. It's not going to be easy to pass on your practice, so why haven't you developed and implemented a practice continuation or succession plan?

IT AIN'T EASY

Practice continuation and succession planning forces us to confront our mortality; to take a cold, objective look at how we do our jobs; and possibly worse, change the way we do things.

Also, you're running as fast as you can just trying to get your client's work out the door, so why would you use your most valuable resources--time and energy--planning for an event that is so uncertain in nature.

On top of those barriers is the most frightening of all--to implement a practice continuation or succession plan we have to get out of our offices and network.

But remember that a key element in selling your practice is its value. When you enhance the value of your practice for a potential future buyer, you enhance its present value to you.

THE RESOURCES ARE THERE

You can't go it alone. There is no lack of information available about how to structure plans, including two excellent California CPA articles: "Succession Planning For Family-owned Businesses," (September 2001) by William M. Weintraub Esq. and Valerie B. Schultz; and "Passing the Baton," (August 2001) by Andrew M. Katzenstein Esq. and David P. Schwartz Esq.

The AICPA offers practice continuation agreements and CalCPA's Los Angeles Chapter developed a practice continuation plan model. However, there is no record of anyone ever using it.

Why? Well, even a well-developed plan like the one designed by the LA Chapter is just a model. Such plans must be modified to meet the unique needs of each practice. And as important as the legal documents are, you need to build relationships to make the plan work.

PRACTICE CONTINUATION LESSONS FROM FOUR PROFESSIONALS

Two doctors, Dr. A and Dr. B, were about the same age, had similar practices and wanted to retire. Both wanted to bring in a young doctor to take over...