1 Getting Started 1
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
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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