Just over a year ago, we wrote a blog piece alerting that staff were a critical issue post-pandemic. We were aware of the increasing demand for quality staff and higher salaries, and some Practitioners we had spoken to were quite nervous.
Fast forward 15 months, and what a time it has been! Now it’s rare to come across a firm that hasn’t lost a member of staff (or two), and finding staff is very hard not just in regional areas but in the major cities as well.
Like we said in that blog….staff can make or break a business. Great staff will not only change your Practice, but can also change your life – giving you more time away from work and less stress about maintaining your business.
Let’s look at the impact this has on Practitioner’s exit strategies…
The Succession plan just walked out the door
We have had quite a few calls in the last twelve months saying that they need to start thinking about other options as their ‘heir apparent’ is no longer there.
They had a great Manager who would have been a great succession plan. Good with staff and equally with clients. Ideal candidate to take over the practice, and there wouldn’t be too much disruption because everyone (staff and clients) knew them already.
Irrespective of the reasons for going, the first question is whether there is someone else internally who can take over the practice. Often the answer is no. So the Plan B is to merge or sell the Practice. Now when this occurs the Practitioner needs to plan for when that is going to happen. They should allow at least twelve months to transition the Practice across to the other firm as part of their thinking.
Practitioners are working harder than ever
Wasn’t it great when firms had a full quorum of staff? Everyone had been there long enough to know the clients, the process for getting the work out the door, and the Principal(s) of the firm could spend a bit of time focussing on their clients.
As soon as they started losing staff, the whole system needed tinkering, which included Principal(s) having to do the type of work that they had delegated out years ago.
We have Accountants telling us that while they were very busy during the pandemic, now it’s even worse due to the loss of staff; they simply can’t get the work out the door as soon as they would like, meaning their time is very scarce.
Some Accountants have said enough is enough. The loss of staff is the trigger for them to push the button on merging or selling their practice, as they simply cannot continue with this workload.
And then there is the hospitality industry….coffee shops & bars closing their doors. Restaurants taking on teenagers to serve customers’ lunch & menus being completely overhauled because their chef has moved on.
The demand for Accounting firms is still high, right?
Well, it’s not as simple. You see, losing staff affects the Seller’s attractiveness to potential Buyers, and Buyers who lose staff are less likely to buy other firms when their preference is to focus on their own situation.
Recently, we were informed that a Buyer had pulled their interest in buying another firm as the Seller had lost one of their Senior Accountants, and the Buyer felt that was too much of a loss. The turnover of the Seller is over $1m/year (so it’s not like it was reliant on the staff member leaving), and they are based in a major Australian city where you would’ve thought that they could replace that member of staff within a month or two. The two firms had been in discussions for over three months.
Nervous Buyers don’t want to have to negotiate the twists and turns of taking on a Seller’s clients over a transition period as well as having to fill capacity left by the Seller’s staff who have moved on. It’s like a double headache. In this situation not only does the Buyer need client relationship staff but they also need back-office capability to get both firms’ work done.
On the other hand, while the interest level in acquiring other firms is still there, they need to make sure that they have a solid base to expand. They themselves may have lost some staff and they are trying to replace those candidates. That is their number one priority.
So where to from here?
Well for one, there are firms that are still interested in merging or buying other firms. There may not be as many but that will improve with time.
Starting the process of talking to someone like us gives some light at the end of the tunnel. We don’t advertise and wait for the results. We are proactive and get like-minded firms together that we believe will be a great fit. Once that process is happening there tends to be a sense of relief and expectation that something will transpire because there is a fundamental connection between the two firms in culture, the approach to clients/staff and how things are done.
One of the great things that is happening for people that are thinking about transitioning out of the industry is that those people are in demand. They have a lot of IP and great relationships with clients. Buyers do value that and often seek to keep incumbents on for years to ensure a healthy transition and use of their knowledge. So, we are not surprised to hear them staying on for 1 or 2 days a week after the transition of their practice.
Interested in getting a second opinion on your Practice? Are staff changes affecting you & your love of your Practice?
Call us on 1300 121 013.