Q&A with industry leader James Solomons
MtR’s Kev Ryan chatted recently with James Solomons, Head of Accounting at XERO, to discuss how 60+ year old accounting practitioners are planning for retirement.
KR Thanks for your time James. In dealing with accountants all day everyday, are you seeing much chatter amongst the 60+ year old accountants about wanting to wind back, sell & retire?
JS I see accountants who are 60 years and older tend to take an approach of winding back. If they haven’t kept up to date with technology, they may see the constant changes in technology as a bit of a threat to them being able to sell their business.
With technology coming along, and changing the way in which firms work, some older practitioners may have been slower to get on the uptake, so their practices now might be a little bit out of date. For them to sell, they have to attract the attention of a buyer that’s looking at a fee-base of clients in their 40s who are happy to move to technology. They are only going to be able to sell to somebody who’s looking at their firm to be more efficient and get growth that way.
KR Do you think they are just talking about it or actually making plans?
JS They are certainly thinking about it and making plans, but a lot of them are wondering where to start. That’s not just practitioners of 60+ years old either, it can apply to practitioners in their 50s too.
KR In your opinion how well planned are older practitioners generally for succession, winding back and retiring?
JS I think that the older professionals are probably not as planned as they thought they were 10 years ago. 10 years ago, the process was pretty straight forward. You could sell your firm based on one year’s fees.
KR There are arguments for and against an older firm adopting cloud in terms of attractiveness to a Merge’or’… being the green field (no cloud) presents an upside against fully cloud (practice has adopted and sold cloud to clients) being easily plugged into the Merge’or’ who is fully cloud. What do you think?
JS It depends on the buyer. In some instances there will be a practitioner who feels as though they are able to add value by transitioning firms to the cloud, by keeping fees similar but driving efficiencies in the backend and seeing the value creation there.
KR What advice would you give to a 60+ year old Practitioner looking to retire within 5 years?
JS My advice would be this: if you want to look at getting a reward for your years of investment, you need to look to implement technology where it’s easy to do so. If you’re going to sell to or merge with any practitioner, regardless of age, you need to be fully supportive of the improvements in technology that they want to bring into the practice. That is where the value is going to be created initially if you haven’t already done it yourself.
It’s not just about the next generation of accountants who wear jeans and open shirts. It’s about finding a firm or practitioner who respects what you’ve built and can see opportunity to work with you in the next few years to help you exit. But you have to support what they want to do, even if you don’t agree.
KR I believe the older practitioner can have an easier run to the finish line if they merge in with someone that can take away all the “noise” freeing them up to do more meaningful work with their longstanding clients. This has to add value to the Merge’or’. Would you agree?
JS I certainly think that if you’ve got a client base that could benefit from a tech tune-up then there is a big benefit if you can find a firm that’s willing to merge in with you to essentially do that tune-up for you. If a firm is coming in and supporting those clients, while you support the transition, there can be a huge benefit to that.
Your new potential buyer is going to enjoy keeping you around and having you as part of that process, which ultimately makes it enjoyable for you, your clients and the new accounting firm.
For more information, please contact Kev Ryan via mergetoretire.com or 0488 12 11 88.
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