After delivering a presentation on “Managing Partner Succession” at a PKF International seminar in Brazil, Bill Cloppert and I were invited back to give a similar talk at PKF’s Latin America Partners Conference in Miami.  We discussed “Succession Process in an Accounting Firm” with over 100 Latin American practices.  Not unlike the seminar in Rio de Janeiro, it quickly became evident that these firms face a lot of the same issues, no matter their geographic location.

When it comes to succession planning in particular, there are several critical facets all businesses should keep in mind for a successful transition.  Most importantly, companies must plan ahead; too many firms fail to do so, creating a chaotic work environment when a Partner decides to leave.  Instead, Partners should plan well in advance, identifying successors for existing clients and informing those clients of his or her pending retirement.  Communication is key in order to transition client relationships to the retiring Partner’s successors.

Building on the concept of communication, it’s vital for the successor to be involved in the planning and strategic decisions prior to the retiring partner’s transition.  By including them in the process of outlining responsibilities and commitments related to their future role, they’ll be better equipped to carry out their duties once the retiring Partner has left.

Beyond the retiring Partner-successor relationship, there are also financial aspects to be considered.  How will the buyout be calculated?  Pro formas should be prepared far in advance so the impact on the firm’s cash needs, revenue and capital requirements are known.  These are all fundamental concerns that should be addressed and dealt with far ahead of the transition date.

To learn more about the succession process or for further information on our presentation, click here to contact us for additional information.