Succession devastates firms
A partner succession crisis is looming in the accountancy profession, which could see more than a quarter of independent accountancy practices disappear, according to a new survey.
Link: Adviser: Smoothing the path to succession
The study, from Kato Consultancy, found that a lack of new talent and funds to pay off retiring partners meant that 28% of the 200-plus firms questioned felt a sale or merger was the only long-term option for survival.
‘Over the last 15 years, nine of the top 10 firms have disappeared and 38 of the top 73 have gone the same way,’ said Kato director Phil Shohet.
‘This trend will continue unless there is a sea change in the way that firms are run.’
The issue, brought about by a lack of succession planning, could cause immense damage to the profession as clients are faced with less and less choice over time, said Shohet.
The survey revealed a high number of partners in their fifties, due to retire in the next 10 years, with few partners available to replace them.
Shohet added that short-term thinking and a lack of business experience from partners meant that many firms were too unprofitable, resulting in the inability to pay off retiring partners.
He suggested that practices start looking outside of the profession for ‘real businessmen with an entre-preneurial flair’.