Replacing retiring partners: succession planning in today’s economy

Citation

Putney, T. (2010), "Replacing retiring partners: succession planning in today’s economy", Human Resource Management International Digest, Vol. 18 No. 3. https://doi.org/10.1108/hrmid.2010.04418cad.001

Replacing retiring partners: succession planning in today’s economy

Article Type: Abstracts From: Human Resource Management International Digest, Volume 18, Issue 3

Putney T. and , Sinkin J. The CPA Journal (USA), October 2009, Vol. 79 No. 10, Start page: 62, No. of pages: 3

Discusses the growing gap between accounting firm owners’ need for partner successors and the available pool of partner-level talent which continues to widen due to demographic changes as baby boomers age and retire to be replaced by a smaller cohort. Explains that this problem is probably the single most important long-term issue facing small to medium-sized enterprises (SMEs), while many of the mergers currently occurring are driven by the companies’ inability to find successors for their partners internally. Points to a major defect commonly found in accounting firms in the lack of an adequate shareholders’ or partnership agreement that dictates how ownership will transfer due to the retirement or termination of company owners, and many agreements in place are incomplete. Lists the minimum requirements of a complete partnership/shareholder agreement. Sets out the critical factors in determining if a company can replace partners as they retire or otherwise leave, covering: excess capacity; role of the retiring partner; and special expertise. Discusses the various succession options that are available for accounting firms that are replacing retiring partners, including: developing talent internally; lateral hires of partner-level talent; merging in a smaller or equal-size company with excess partner-level talent; and external succession through merging or selling to a larger successor company, or a cull-out sale. Article type: Viewpoint ISSN: 0732-8435 Reference: 39AC723

Keywords: Accounting industry, Organizations, Partnering, Succession planning, United States of America