The Exit Bullet
Got 10 minutes? That’s all it takes to sharpen your practice! In this episode of the Bissett Bullet podcast, Martin Bissett delivers two actionable insights to help you grow your firm without the overwhelm.
Thinking about retirement, but not sure how to exit your firm?
After 30+ years of building your practice, the finish line is in sight. But how do you leave on your terms, protect your legacy, and make sure the next chapter goes smoothly? In this episode of The Bissett Bullet, we introduce you to SAM - the three key options for exiting your firm.
Part 1: Why Most Accountants Don’t Prepare
Many firm owners intend to hand things over internally, but never quite get around to it. Deadline-driven days and client demands keep pushing succession planning further down the list. As a result, they often sell under pressure or default to options they never really wanted. The question is: will your firm’s exit be intentional or reactionary?
Part 2: Meet SAM – Your Three Exit Routes
In the second half, we explore the acronym SAM, the three most common ways to exit your firm:
Sell,
Appoint a successor,
Merge.
I’ll walk you through what each one involves, who they’re right for, and how to avoid the common mistakes that cost owners control, value, and peace of mind.
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Ready to grow your firm with practical, no-nonsense advice? The Bissett Bullet podcast gives you bite-sized insights you can implement today.
Visit www.bissettbullets.com for more resources.
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4impactdata is an AI-powered platform that helps firms move beyond historical reporting by delivering clear, actionable next steps for your advisory team so that you can provide more value to clients without the guesswork of dashboards. To book a conversation or demo, or to join the 10X Advisory Cohort with resources from Martin, along with 10% off your first year’s subscription, visit 4impactdata.com
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ProNation is a global community for accountants and bookkeepers that gives you peer-to-peer support, expert guidance, and proven strategies to run a more profitable, efficient, and impactful firm. Led by Will Farnell, Lucy Cohen, and Martin Bissett, it helps practices of all sizes grow with confidence and better serve their clients.
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In association with CPA Trendlines
Transcript
So the time has finally come.
Speaker A:Your career of 30 years or more is drawing to a close.
Speaker A:You can see the horizon getting rather near and retirement beckons.
Speaker A:But you're the owner of a firm and you're not sure exactly how it is you get from where you are now to that retirement boat that's leaving for the island in the sun.
Speaker A:So what are your options?
Speaker A:Well, your options are that you need to meet Sam.
Speaker A:Meet him here in this week's Bullet.
Speaker A:That was a cryptic opener, wasn't it?
Speaker A:I talked about Sam needing to be met.
Speaker A:Who is Sam?
Speaker A:Well, as usual with me it's an acronym and SAM are your three major options for exits whenever you get to that point in your career.
Speaker A:But let's first of all see how you got there.
Speaker A:So let's take the example of a firm owner I know who had built a mid seven figure firm that's in pounds, it was in the uk, so maybe higher seven figures in the US and they were multi partner but they were the majority shareholder and they had always intended to bring through the junior management team.
Speaker A:They'd always intended for it to be a management buyout style situation that was ensured the practice's legacy.
Speaker A:And you know the story in accountancy, event driven people constantly chasing the tail, constantly chasing deadlines, never quite getting round to that thing that they were going to do and ends up selling to a private equity firm.
Speaker A:You've heard that story a number of times before.
Speaker A:Here's a different story.
Speaker A:About five years or so ago I made a video which we called Generation 3 and we used to make these, when I was into public speaking we used to make these big production videos that we would use as the impact, as the gut punch to the audience.
Speaker A:Because of course you know in, in keynote you fall asleep while the speaker's talking, don't you?
Speaker A:Maybe that's just me.
Speaker A:But nevertheless, having a video that really brought the point home in an audio visual way I thought was something I haven't seen other speakers do.
Speaker A:And I thought it would be good.
Speaker A:And it was, it was very impactful at times.
Speaker A:There's one we call Generation three.
Speaker A:I made the point of me being now in the third generation of my career, by which I meant that when I first came in to the accounting world, those partners at that time, then I retired or they're dead or both.
Speaker A:And the second generation are the generation that are selling out to PE firms right now and the third generation are the ones that are just coming through into partnership right now and I won't be around see the fourth most likely.
Speaker A:So I was saying, so what will happen to that third generation?
Speaker A:Will they make the exact same mistakes as the previous two of not preparing their exit and just chasing their tail, or will the business structure of accountancy change?
Speaker A:And so the video followed the story of this business owner who was now where he wanted to be in his life and business because he got help from his accountant who had taken him to where he wants to be and picked him up from where he was.
Speaker A:And he was in a gallery looking at pictures of his, you know, not only his former situation, but also other business owner stories that this accountant had also helped.
Speaker A:And then we go through the story of how that happens.
Speaker A:And I asked the question at the end of that, going, well, what kind of accountant are you going to be?
Speaker A:You know, when you grow your firm, are you going to be.
Speaker A:You provided some compliance services and that was it.
Speaker A:And some clients were reasonably grateful for keeping them compliant by law.
Speaker A:Was that all you were destined for?
Speaker A:Is that enough of a legacy?
Speaker A:Only you can answer these questions, but ultimately, when it does come time for exit, there's only Sam who can offer you options.
Speaker A:Now who is Sam?
Speaker A:I'm going to tell you all about him after a word from our sponsors, of course.
Speaker B:Do you need more time, money, confidence or a better team?
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Speaker A:That's the number four fourimpactdata.com that's fourimpactdata.com okay, thank you very much by the way, for being with us on this podcast that over 100,000 of you now are.
Speaker A:And of course to our sponsors who support the show, we're very, very grateful for them as well.
Speaker A:So let's not keep you hanging any longer.
Speaker A:Who is this Sam I'm talking about?
Speaker A:Well, if you own a practice and it's coming towards exit time, or you're trying to prepare for exit in five years, three years, something of that kind of order, then really Sam's your option.
Speaker A:Sell the firm and we'll come back to the details of that.
Speaker A:Acquire another firm or merge with a firm.
Speaker A:You might be thinking, well why would acquire or merge secure my exit?
Speaker A:So let's deal with sell.
Speaker A:First of all, in the old days you would put a book of clients up for sale.
Speaker A:A practice broker would go about finding you a buyer.
Speaker A:They'd offer you one times fees over three years with clawback and that kind of thing and a non compete and that would be your deal.
Speaker A:And your clients would pass across the new firm and the ones who just wanted you would wait for your non compete to expire and then they'd come and work with you again.
Speaker A:And that's how it was these days.
Speaker A:Certainly at the time of recording this.
Speaker A:I don't know how long this will live in the digital world, but at the time that we're recording it, private equity is now investing or taking controlling interest in accounting firms.
Speaker A:They're doing it for many reasons.
Speaker A:One is data.
Speaker A:Two is corporate finance opportunities.
Speaker A:But they see professional services as good recurring work, steady recurring work, where it is largely underpriced by market averages at the time that they acquire it.
Speaker A:So there's huge room for growth just organically, nevermind winning new clients.
Speaker A:So that's nice, easy, forecastable stuff for private equity firms to enjoy.
Speaker A:So you could, like many people now do sell to a private equity firm.
Speaker A:Typically their deals are structured 60, 20, 20 in terms of payout.
Speaker A:So that's nice as well because you get a lot of your money up front.
Speaker A:But is it right for you?
Speaker A:Because something I notice right now is a micro trend.
Speaker A:Five or six firms who don't want the private equity who are trying to remain independent and the reason is, is because they don't want to be a part of a brand that they don't identify with that they didn't come up with or be subject to the rules of the culture of the organization, that they are being bought up by reporting into some regional manager who's 20 years younger than they are.
Speaker A:That's not for everybody.
Speaker A:So although private equity offers the golden check, and that's very attractive, it nevertheless comes with a number of tie ins that may or may not be the right fit for you.
Speaker A:So nevertheless, if you want to exit, then selling is obviously going to be your first route.
Speaker A:So do you have to sell in order to exit?
Speaker A:No, you can acquire.
Speaker A:How would acquiring facilitate your exit?
Speaker A:Well, if you acquire a firm, you're acquiring the talent of that firm often as well.
Speaker A:And if you're smart about who you acquire, then you may well find that you've got the people who can take on your role.
Speaker A:And yes, it's a betting in period.
Speaker A:And yes, of course that doesn't mean that suddenly you have sold and you have all the money, but you will be rid of the responsibility in short order, six to 12 months.
Speaker A:And you'll have people running your firm for you and you'll still own it.
Speaker A:So so long as your pricing is good and you're profitable and the work is getting done, then you have then an income stream.
Speaker A:But not a managerial responsibility, an organizational responsibility.
Speaker A:As a shareholder, you will sit on the board and your direct strategy and give you advice.
Speaker A:But by acquiring, you acquire talent and fees.
Speaker A:So that is an option for you if you don't need the big check up front or the not dissimilar option three, the M in Sam, which is to merge for the same reasons.
Speaker A:You might not buy a firm and wipe its brand off the market completely.
Speaker A:You might merge with a firm and make the pie bigger for everybody and actually look like a larger firm.
Speaker A:A new name describing two firms now, three firms, four firms.
Speaker A:You might be a group now where again you're bringing in talent as a result of that merge.
Speaker A:Where again you are then the beneficiary of lots of different people who can generate fees, not just you and your team.
Speaker A:And again, you are one step back so that you can test whether retirement is good for you or whether you just want to perhaps improve your work life balance.
Speaker A:So that sell, acquire, merge option known as deal with Sam is what I recommend to you and is today's bullet.
Speaker A:You don't necessarily have to sell to pe.
Speaker A:And just in case anybody doesn't know what I'm talking about there, I mean private equity organizations, you might take investment from private equity and not have them have controlling interest in your firm.
Speaker A:That's another option open to you.
Speaker A:So maybe we should put investment in there as well and it should become Sami.
Speaker A:But nevertheless, you do have options.
Speaker A:It doesn't have to be one particular pre prescribed journey for you.
Speaker A:It's got to be right for you, your team and that forgotten conversation of people, your clients as well.
Speaker A:But done right, you can still keep your hand in and enjoy the thrill of building a firm without all the responsibility.
Speaker A:And you can also enjoy different and perhaps more broad income streams as the firm service offering increases, diversifies.
Speaker A:So today's bullet is considered Sam, or maybe Sammy as to which route is right for you in Exit.
Speaker A:However, I hope not too many of you exit because then there'd be nobody left.
Speaker A:Listen to the bullet.
Speaker A:So for those of you who are listening, and there are lots of you, thank you very much for being with us.
Speaker A:Thank you very much to our sponsors and I'll catch you on the next episode.
Speaker B:Bye for now.
