Key Areas EVERY Partner Buyout Plan Should Address

We review a dozen or so partner retirement plans a year and have done so for over the past 20 years or so. No question- the award for the “Most Important Aspect of Practice Management that is the Most Neglected” goes to partner agreements.

Our NEW monograph, CPA Firm Partner Retirement / Buyout Plans stipulates that a well-written plan has 29 features that must be addressed.

Following are some critical areas your plan should focus on that are thoroughly detailed in the monograph:

1. Will interest be paid on benefits?

2. How will the firm’s overall goodwill be valued?

3. How will an individual’s share of the firm’s value be determined?

4. How will vesting work, including the age for full vesting?

5. Will client transition be defined and if so, how?

6. Will notice and transition be required in order to receive benefits?

7. Will your firm have a mandatory retirement policy? How will it work?

8. Will there be limits on annual payouts to all retired partners?

9. Will benefits be reduced if a retired partner’s clients leave?

10. Will non-annuity services be treated the same as traditional CPA services?

11. How will death and disability be handled?

12. Can a partner leave the firm and freely take clients and staff?

13. What partner actions will result in the loss of retirement benefits?

Our NEW 20 chapter monograph, CPA Firm Partner Retirement / Buyout Plans, might just be the first of its kind: a comprehensive guide to creating a well-written, competitive buyout agreement. Whether you’re in the process of updating an existing plan or starting out to create your first-ever buyout agreement you’ll benefit from the insights I’ve gleaned from working with hundreds of client firms to structure viable plans that protect all three stakeholders: the firm, the retiring partners and the partners who will sign the retirement checks.