The First Step in Succession Planning-Assess Your Need for Replacement Partners

The first step in developing a plan for the internal succession of your partners is to develop an understanding of the nature and timing of their replacement. This will provide you with what you need to know for acquiring the necessary talent and developing viable successors.

Start with when each partner is likely to relinquish their ownership based on their stated intentions or circumstances. Ideally your owner agreement provides for requirements that guide this decision such as minimum and maximum age limits for retirement. Even if your agreement doesn’t have those provisions, make your best estimate. Even better is transparency from your partners about their transition plans.

Then consider what kind of replacement will be required for each partner that is 10 years or less from retirement between the following two choices. Role reallocation means the partner’s duties can be reallocated to the remaining partners without adding a new partner. This may be because the retiring partner has no special skills or the firm will likely have excess partner capacity to absorb their duties. Role Succession means at least one new partner is likely to be required to replace a retiring partner either because of unique duties or skills or due to capacity constraints.

Once you have determined the timing and nature of required replacements, you can assess how acute your issue of acquiring and developing new partners is. This will direct you to what you need to do to strengthen your succession bench if doing so is required.


About the Author

terry2Terrence Putney, CPA ( is the President of CPA Consultants’ Alliance and CEO of Transition Advisors, LLC,, which exclusively consults on succession and growth strategies for accounting practices nationally and ownership transition. He can be reached at or 866-279-8550.

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