Retiring partners could find their firms worth less than expected as a generation of partners looked to retire before embracing cloud accounting practices.
A “mass exodus” of retiring partners in New Zealand in the next five to 10 years was highly likely, despite 60 percent of firms having no succession plan in place, reported CCH New Zealand’s report “the Good, the Bad and the Ugly.”
More than a third of New Zealand Institute of Chartered Accountants members were aged over 50 and nearly 30 percent of New Zealand firms identifying themselves as “in decline” had no succession plan.
“The biggest challenge these firms claim they face is finding the right person to take over their business,” CCH said in a press release.
The value of a firm could depend on how well it handled the transition to cloud accounting as businesses were switching to cloud savvy accountants, the survey found. Over 72 percent of SME business owners aged between 18-34 considered looking for a new firm if their current accountants didn’t embrace the cloud, said CCH iFirm’s report; “Cloud Computing – A matter of survival for the accounting industry?”
“The importance of cloud accounting to your firm’s future cannot be stressed enough. Keep in mind that while not all businesses are using the cloud yet, an increasing number of business are intending to make the switch in the future, and that number will only increase,” said Gary Adamson, CPA and president of Adamson Advisory.
The survey canvassed over 250 practices ranging from one-person sole practitioners to multi-partner businesses with more than 60 staff located in city, suburban and regional areas in New Zealand.
In an article, “Succession Planning: Both Sides Now,” CPA and president of Stowe Management Corporation Mark Fowler said succession planning would be challenging because it was about an individual gradually transitioning from being less involved into retirement with adequate funds, as well as having the right talent to step in for the business.
“True succession planning is about developing a business that has the ability to continue to grow and thrive despite ups and downs, and developing team members whose lives are supported in facilitating that process,” said Fowler.