Many CPA firms are now grappling with succession issues, according to the results of the 2020 Succession Planning Survey, released in a webinar held on Nov. 23. More than half of multi-owner firms (55%) said they are currently experiencing succession challenges, up from 26% in 2016, the last time the survey was conducted.
Demographic changes, especially the aging of the Baby Boomer generation, largely account for this shift, said Bill Reeb, CPA/CITP, CGMA, the CEO of the Succession Institute and a former AICPA chair, who presented findings during the webinar.
Many firms with single owners and sole practitioners will also be contemplating succession in the next few years, the survey found: 26% of respondents in this group said they planned to retire within the next five years.
The survey, a joint effort of the AICPA Private Companies Practice Section and the Succession Institute LLC, has been conducted every four years since 2004. This year’s survey polled 587 representatives of CPA firms in September and October. The respondents included 270 from multi-owner firms, 250 from sole-owner firms, and 62 sole practitioners, all based in the United States; the remainder were based outside the United States. Single owners and sole practitioners were asked a different set of questions than respondents from multi-owner firms.
COVID-19 not altering CPAs’ succession timelines
The survey results indicate the COVID-19 pandemic has not affected most firms’ plans for succession. More than three-quarters (76%) of single owners and sole practitioners said the pandemic has not changed their time frame for retirement, while the vast majority of respondents from multi-owner firms (88%) said it has not changed their senior partners’ time frame for retirement. The majority of single-owner firms and sole practitioners (72%) also said the pandemic had not changed their plans for merging or selling their firms.
Nearly two-thirds (63%) of single owners and sole practitioners said the pandemic had not affected their firms’ value, while 24% said their firms increased in value during the pandemic. About half of multi-owner firms (49%) said the pandemic had not affected their appetite for mergers, while 22% said they had never been interested in mergers and 14% said they were not currently interested in mergers.
Firms did report one lasting change the pandemic brought about: The majority of them expected that more of their staff would work from home after the pandemic ends than did before the pandemic. Almost three-quarters of multi-owner firms (71%) and nearly half of sole owners (47%) said that more of their staff would work remotely once the pandemic is over. In some cases, respondents expected the shift to remote work to be considerable. Eighteen percent of respondents from multi-owner firms and 17% of sole owners estimated that their employees would work remotely 40% or more of the time than they did before COVID-19.
— Courtney L. Vien (Courtney.Vien@aicpa-cima.com) is a JofA senior editor.
