It may seem intuitive to use ownership percentage to decide important financial and governance issues, here are three common reasons why: 1. Many clients use ownership percentages to drive important matters. CPA firms reason: “If our clients do it, why shouldn’t we?” 2. Related to #1, many CPA firm clients are companies who derive a…

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Here’s a question that frequently arises in my consulting engagements:  What are your thoughts on partners wanting to work for the firm in a non-partner role after they retire, who continue to control “their” clients while receiving deferred compensation and a salary for their work? The answer is rooted in the maxim:  “No transition…no goodwill.” …

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Partner buyout plans can be difficult to navigate. We want to be fair to our partners, and we want to be treated fairly in return. In the process, differences of interpretation inevitably arise. Here are some queries we’ve recently received you may find instructive: Partner’s Question:  As founder and rainmaker of our firm, I have…

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CPA firm partner retirement/buyout plans have always created angst among partners.  Prospective and young partners often question the plans because they see themselves paying into some sort of Ponzi scheme, wondering if their payday will ever come.  The departure of impactful retiring partners seems to jeopardize the future viability and hence, value of the firm. …

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A reader’s question: Our firm has started to buy out a key partner, who is 65.  After giving notice of his retirement and after he “retired,” he is still managing and controlling his clients and has begun the transition process. He is still doing some non-billable management work, too.  He plans to stick around until…

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  Laws seem to be moving towards making mandatory retirement illegal due to age discrimination.  Can CPA firms still safely provide for mandatory retirement in their partner agreements? Let’s be clear what mandatory retirement means in practice. The extreme definition, used almost exclusively at giant firms, is that partners must retire cold-turkey, or close to…

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Question from a Reader:  What are your thoughts on partners wanting to work for the firm in a non-partner role after they retire, who continue to control “their” clients while receiving deferred compensation and a salary for their work? Response:  The root of the answer to your question is the expression:  “No transition…no goodwill.”  This…

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