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