Solos reluctant to sign practice continuation agreements

Some things never change.

My constant and strong recommendation to sole practitioners is that they enter into a practice continuation agreement (PCA) with another CPA firm, preferably one large enough to have enough personnel to be able to absorb the solo’s practice should a traumatic event occur.

A PCA provides for another firm to continue servicing the sole practitioner’s clients should a medical emergency prevent the solo from working.  The agreement often cites terms for the other firm to purchase the practice.

To me, having a practice continuation agreement is a “no-brainer.”  I can’t think of a single reason why a sole practitioner should NOT want to do this.  Yet, I have only seen a small handful of firms enter into such an agreement in my career.

Last year, during the peak of the tax season, I received a call from a friend of a solo whose health had prevented him from working since the previous fall.  I was asked to sell the firm – in mid March!  I’ve had involvement in roughly a dozen such cases over the years. Each time, I think how sad it is that the solo did not have an arrangement in place with another firm.

Dealing with one’s own mortality is admittedly difficult.  Solos know that eventually, they must do something, but they have an enormously difficult time addressing their own estate planning.  They may not consciously be making a decision to wait until they die or become disabled to make a move, but that’s essentially what they are doing.

Alas, I’ll keep plugging away and won’t stop until I get more solos to enter into PCAs.