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How Can a Deal be Structured if I Am 1 to 5 Years from Slowing Down, But Don't Want the Accountability of Merging with My Successor, or Giving Up Income or Control? Are there alternative deal structures as well?

It is critical that firms leave appropriate time for a transition, which can take a few years. Most practitioners, however, are hesitant to merge with their ultimate successor too far in advance, as they prefer not to:

  • Give up control. It is hard to be master of your domain and then suddenly have the accountability of being a partner in a larger firm
  • Give up income. Who wants to work the same, bring in the same revenues, have additional accountability and make less?
  • Have liabilities relating to the actions of others instead of their own
  • Lose the ability to come and go as they see fit, handle financial issues and make decisions.

Identifying the time frame needed to implement a proper transition is challenging at best. However, this challenge is well worth the effort as it will result in a significantly better financial proposition for you.

Because of the issues raised above, a new approach to succession planning has evolved called the Two-Stage Deal. This approach enables the CPA with the near-term (1-5 years) goal of slowing down to gradually transition the client relationships to ensure better retention, to give the transitioning professional protection relating to death and disability, and to enable them to maintain both control and income without the accountability and liability associated with a merger.

More information on the Two-Stage Deal:

For additional alternative deal structures:

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