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
