By the time a practice goes to market, the price is largely already set. Not by the broker, not by the negotiation, but by decisions made or not made two and three years earlier. Around 60% of businesses expect a partner to retire within five years (Accountants Daily / NAB), and yet most firms still don’t have an active plan.

Here are the succession mistakes that cost the most.

Treating succession as an event rather than a process

Succession isn’t a decision you make once. It’s a sequence of changes to how the practice operates, most of which take years to bed in.

Industry guidance consistently recommends beginning five years or more ahead of a planned transition (BOZ). Some advisers put the realistic timeframe at eighteen months to three years. Either way, it’s measured in years.

Waiting until retirement almost always results in lower valuations and fewer options; the equivalent of listing a property with two weeks of marketing.

Not having a documented plan at all

Under APES 325, documenting a succession plan is a mandatory risk requirement for firms in public practice (The Access Group). Plenty of principals who advise clients on exactly this have never done it for themselves.

There’s also a real commercial cost. The ATO has urged private group owners to undertake succession planning specifically because poor planning creates unintended tax consequences, and groups without documented plans or supporting documentation sit at materially higher risk (Accountants Daily).

A plan doesn’t commit you to leaving. It just means the practice survives if something unexpected happens, and that a buyer can see how the transition would work.

Building the whole practice around yourself

This is the same finding that dominates practice valuations, and it originates in succession decisions.

Every year that you remain the person clients call, the person who signs everything, and the person who attends every meaningful meeting, you make the practice slightly harder to sell and slightly cheaper to buy. The rule of thumb is clear: if you can demonstrate the revenue continues without you, you get the top of the range.

The fix is unglamorous and slow. Introduce a second name into every significant relationship. Have a manager lead the annual meeting rather than attend it. Change who signs the correspondence. None of it happens in six months.

No generational spread in the team

Excluding the largest firms, only around 20% of public practices have sufficient equity partners coming through to ensure continuity (CPA Australia).

If there’s nobody behind you, you’ve eliminated an entire category of exit, the internal transition, and made yourself dependent on the external market. You’ve also made the practice riskier to an external buyer, because they’re acquiring a team with no succession depth of its own.

Consider locking in key people with equity stakes well ahead of time, starting small at 5 to 10% with incremental increases. It costs you something. It costs less than the alternative.

Letting the client base age alongside you

Long client tenure proves retention, which buyers value. But a fee base where most clients are winding down within five years is a declining asset, and it’s priced as one.

You don’t need a marketing campaign. You need visible evidence of momentum. A modest but steady flow of new clients over the previous two years reframes the practice from “winding down” to “stable”, and that reframing alone is worth real cents in the dollar.

Assuming the internal successor will happen by itself

Promoting from within genuinely does offer the smoothest transition. The successor already understands the business and has the client relationships. But it needs to be actively built, and it needs honesty about whether the candidate can fund it.

Many internal successions fail not on capability but on finance, discovered at the last minute. Have the funding conversation early. And accept that a gradual internal transfer will rarely realise the maximum lump sum an external sale might. As one adviser puts it, don’t let price get in the way of succession. It’s often better to accumulate wealth outside the practice than to hold out for a number that prevents the transition happening at all (CPA Australia).

Not preparing for the unplanned exit

Illness, injury or death before retirement is the succession scenario nobody plans for and everybody should.

The essentials: a current will with clear terms for the practice, a power of attorney, instructions for how client and staff needs would be managed, key person and disability cover, and for sole practitioners, a standing arrangement with another practitioner who can step in (CPA Australia). Make sure someone other than you can access the practice systems.

Reviewing it once and filing it

Succession planning is dynamic. Review the plan every six months. Firms change, people leave, the market moves, and a plan written four years ago for a team that no longer exists isn’t a plan.

Start with where you actually are

The Practice Value & Readiness Scorecard is a ten-minute self-assessment across the nine factors buyers assess. It gives you an indicative value range and, more usefully, shows you which two things are holding it back — which is exactly the input a succession plan needs.

Free, confidential, and no details about your firm required.

Get the Practice Value & Readiness Scorecard

General information only — not financial, legal or valuation advice.

The post Succession Mistakes Accounting Principals Make Before They Sell appeared first on Business Brokers Gold Coast - Growth Generation Commercial Group.

There are actually five pathways, and they suit very different people. The right one depends less on what your practice is worth than on how much you want to be involved, how quickly you need the money, and how much you care about what happens after you leave.

Here they are, honestly compared.

Option 1 — Outright sale to an external buyer

The cleanest exit. You sell the practice or a parcel of fees to another firm, take the proceeds, and transition out over an agreed period.

Timeframe: Up to six months to prepare and market, then six to twelve months of transition. Some sources put full completion at one to three years from contract (BOQ Specialist).

What you’d realise: Australian practices generally trade between 0.8 and 1.4 times gross recurring fees, with metro averages recently around 113 cents in the dollar (Accounting Times). Larger firms are priced on earnings instead, typically 3.5 to 5 times EBIT.

Suits you if: You want a definite end date, the best available price, and you’re comfortable handing over control of what happens next.

The catch: Typically 70 to 80% is paid on completion with the balance deferred over twelve to twenty-four months against client retention, with clawback provisions if retention drops below around 80 to 85% (Miro Capital). You’re paid partly on how well someone else holds your clients.

Option 2 — Internal succession

You sell to existing partners, or develop a manager into an owner and transfer equity over time.

Timeframe: One to two years from initial discussions if you’ve planned properly (BOQ Specialist), but the development work behind it takes considerably longer.

Suits you if: Legacy and continuity matter more than maximising the lump sum, and you have a genuine candidate. Transition is smoothest here: the successor already knows the business, the clients and the culture, and the personal relationship survives the handover.

The catch: Two big ones. Excluding the largest firms, only around 20% of public practices have sufficient equity partners coming through (CPA Australia), so for most owners the candidate simply isn’t there. And a gradual internal transfer will rarely realise what an external sale would. Consider locking in candidates early with small equity stakes at 5 to 10%, increasing incrementally.

Option 3 — Merger

You combine with another practice, usually taking equity in the larger entity and stepping back over time.

Timeframe: One to five years from signing (BOQ Specialist).

Suits you if: You want to keep working but shed the ownership burden, and there’s a firm nearby with genuinely aligned culture, systems and client philosophy.

The catch: Mergers are difficult to arrange, requiring many elements of two businesses to align; staff, culture, technology, fee philosophy. And critically, if you’re not merging with a substantially larger firm, succession is merely deferred rather than solved. You’ve swapped one succession problem for a shared one.

Option 4 — Partial exit or fee parcel sale

You sell part of the practice, a fee parcel, a service line, or a percentage of equity and continue with a reduced load.

Timeframe: Often the quickest. A clean parcel of quality fees can move in weeks in the current market.

Suits you if: You’re not ready to stop, but you’re ready to do less. Also strong if you want to de-risk personal wealth held entirely inside the practice, or if you want to test the sale process before committing to a full exit.

The catch: You need to be able to cleanly separate what you’re selling; clients, work-in-progress, staff time without disrupting what you’re keeping. And selling your best fees first leaves you with a less valuable book for the eventual full exit. Sequence matters.

Option 5 — Orderly wind-up

You stop taking new work, transition clients to other practitioners, and close.

Suits you if: The practice is small, heavily personal, and genuinely wouldn’t attract a buyer or if health or circumstances have removed the path for anything else.

The catch: You realise little to no capital value from a lifetime of work. This should almost never be the plan. It is, however, quite often the outcome of not having one which is exactly why the timing question below matters more than the option question.

Which one is right?

Three questions usually settle it.

How involved do you want to stay? Not at all points to an outright sale. Somewhat, for a while, points to a merger or partial exit. Meaningfully involved but not in charge points to internal succession.

How much does the number matter? If the proceeds fund your retirement, an external sale tested against the market will almost always produce the most. If you have wealth outside the practice, you can afford to prioritise legacy.

Who’s behind you? If there’s a credible internal candidate, you have five options. If there isn’t, you have three.

And one observation worth sitting with: it’s often better for practitioners to accumulate wealth outside the practice than to let price prevent succession happening at all (CPA Australia). The owners who hold out for a number frequently end up at option five.

Whichever you choose, the timing is the same

Every one of these pathways is improved by time. Preparing a practice takes up to six months, transitions run six to twelve, and the structural work — reducing principal dependency, developing successors, refreshing the client base can take years.

Start when things are going well, not when your energy, your health or the market is in decline. That’s what gives you the thing that actually matters: choice.

Not sure which pathway fits?

The Practice Value & Readiness Scorecard scores your practice across the nine factors buyers assess and gives you an indicative value range. It won’t decide for you — but knowing what your practice is worth today is the input every one of these five decisions depends on.

Ten minutes, free, no firm details required.

Get the Practice Value & Readiness Scorecard

Or if you’d rather just talk it through confidentially, a twenty to thirty minute conversation costs nothing and commits you to nothing.

General information only — not financial, legal or valuation advice.

The post Five Succession Options Before You Retire appeared first on Business Brokers Gold Coast - Growth Generation Commercial Group.