Generational Viewpoints: Clients in succession

Accounting

This edition of Generational Viewpoints features two professionals from Andrea & Orendorff, a 35-person firm based in Kenosha, Wisconsin. We asked baby boomer partner Kathy Andrea, born in 1955, and millennial partner Ryan Goerres, born in 1988, to share their perspectives on the following question:

“How do you realign your client base to prepare for succession?”

Andrea-Kathy-Andrea & Orendorff

Andrea’s baby boomer viewpoint

My former partner and I, also a woman and only one year older, started planning for our retirements and our firm’s succession of leadership almost six years ago. Our plans have really come to fruition over the past year. This transition is an adjustment for us and for our team, and it impacts our clients, too. The necessary realignment of our client base could have followed one of two potential paths. The first path was a buyout or merger with another firm. The second path was one of internal leadership promotion. Developing our internal leadership was a better fit with our firm’s culture and for our clients, so we chose to follow that path.

Over the last 40 years, our firm has maintained two service segments. The first was a for-profit segment that provided business and individual tax, accounting and business consulting services. This segment was one-fifth of our $3.2 million (2020) in revenue. Our firm’s specialty is providing nonprofit and government services. We have a standing contract in place with county government that makes up $2 million of our revenue and employs nearly 60% of our staff.

Our firm’s approach to client service has always been collaborative. We were fortunate to find a leader to fill my former partner’s role, which allowed her to retire at the end of 2020. My new partner has been with us for six years now and has grown as a leader and brought new life to our internal succession planning. Though I have worked with some of my clients for 35 years, they have warmly welcomed our new leadership team. I credit this smooth shift to the talents of my successors and the confidence I have in them.

One of the best decisions we made during this process was the dramatic change to our client base. My former partner did individual taxes, but neither of us had much small-business expertise. We relied on high-level staff to manage that segment of the firm. After strategic planning and much deliberation, we decided to focus on the specialization we know best and sold the for-profit, tax-focused segment of our firm. We worked closely with the buyer firm by coordinating communications and marketing with our clients. A major key to our success was that my former partner, who enjoyed doing individual taxes, moved to the new firm. Many of our clients interpreted this move as proof that we had carefully selected a good place for them to land. We successfully transitioned 75% of these clients to the new firm for this tax season. For the surviving portion of A&O focused on nonprofit and government services, we have already made up for the revenue we transitioned in just one year’s time. We haven’t missed a beat.

Goerres-Ryan-Andrea & Orendorff

Goerres’ millennial viewpoint

While pondering the answer to this question, I considered my experience over the past six years. During this time, I’ve worked closely with A&O’s two long-time partners as we prepared for their retirement and transition of their clients to our firm’s next generation of leaders. Succession planning can be stressful. At its core, this process presents a great deal of change that can be difficult for the firm as well as our clients. However, with proper planning and careful management, succession presents an amazing opportunity to ensure clients are transitioned to a new generation of firm leaders that align with the firm’s identity and vision for the future.

At A&O, realigning our client base began with a day-long strategic planning meeting. Key members of the firm came together to discuss many different aspects of the firm, including the areas we practice in and the clients we serve. Coming out of this meeting, we had a much clearer picture of who we are as a firm and our vision for the future. But the strategic planning meeting was only one step of many in a long process that continues today. Over the next several months, we analyzed various areas of our firm, along with the clients that make up those areas, and compared them to our strategic plan. Some tough questions arose during this process. We felt the tax services no longer fit well with our firm’s identity and vision for the future. The difficult question to answer was, “What do we do with this area and all of the clients that make it up?” Also, there were clients in areas that we felt no longer fit our firm. What would we do with those clients?

In answering these questions, we made some decisions that significantly affected our client base and succession plan. Since our tax department no longer aligned with our direction as a firm, we decided to sell this area to another firm, resulting in much happier partners. No longer needing to plan for this area, the newer partners can now focus on the areas and clients we are passionate about that also align with our vision. Additionally, we knew the tax clients would be better served by a firm that specialized in their needs.

I see the realigning of our client base as a continuous process that we’ll focus on and fine-tune regularly. As we bring new leadership and staff along and adapt to constant changes in the accounting industry, there will always be a need to revisit and update our plans and client base. Doing so was a critical success factor in partner succession planning and transition, and every firm that is retiring partners should carefully undertake this analysis and planning.

This column is facilitated and edited by Sarah Land, the millennial marketing and program coordinator, and Jennifer Wilson, the baby boomer co-founder and partner, of ConvergenceCoaching LLC, a leadership and management consulting and coaching firm that helps leaders achieve success. To have your firm’s generational viewpoints considered for a future Accounting Tomorrow column, email them at sarah@convergencecoaching.com.

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