The 2018 Good Bad Ugly Succession poll provided useful information regarding the current status and future succession plans of Australian accounting firms. The key insights include:
- A transformation is happening now among directors in the profession. An aging trend has been reversed with 2018 Good Bad Ugly results revealing directors are now younger than 12 months ago
- A large number of directors (29%) will be retiring over the next 5 years. Will this have a disruption effect on the profession?
- Will the profession experience an increase in startups with managers refusing to buy-in? 8 percent of firms have experienced this over the past 12 months
- Just one in four accounting firms surveyed had a documented succession plan in place. If a firm is unable to plan for succession internally, how can they provide an added value service such as succession for their clients and grow revenue?
- Four times multiple of EBITDA is the most popular self valuation for an accounting business in 2018.
With these insights in mind, (and a majority of firms believing it is going to be harder to exit in five years’ time), planning for the transition to retirement must follow a defined process:
- What is your preferred exit strategy? Approximately one-third of firms will transition via internal succession (Is this becoming harder due to the barriers of entry for accounting practices being relatively low?)
- 14 percent say they will introduce new directors to the business. Have you identified the core attributes these future directors must bring to the firm?
- 24 percent of firms will be looking for an outright sale. How are you planning or what are you implementing now to improve the value of your business?
- A majority of firms identified the following as their preferred options to increase the value of their business:
- Streamlining workflow & processes, possibly achieved by;
- Leveraging technology, consequently allows you to;
- Delegate lower end work to the appropriate team member
With many directors/partners fast approaching retirement, we suggest you start now to focus on improving your business to make it more attractive for purchase or merger. Business Fitness has been providing up-to-date modern tools to the accounting profession since 2001 to help Australian accounting firms reorganise and restructure their process.
*Report based on 163 participating firms
Click Here to download your copy of the 2018 Succession Report
Brad also co-ordinates the annual benchmarking study “The Good, the Bad and the Ugly of the Australian Accounting Profession.”
In his spare time you will find Brad in the backyard playing cricket with his two boys.
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