Shoulda, Woulda, Coulda…

When it comes to facing reality, there are two types of people in this world – those who listen and learn and those who do neither despite repeated efforts to convince them otherwise.

Case in point, people (who shall remain anonymous) that continue to lend my brother-in-law money, despite a two-decade long track record of being stiffed on a regular basis, they continue to write checks.

Once was enough for me, I didn’t need to learn that lesson twice.

This brings us to today’s subject, succession, or, in too many unfortunate cases, lack thereof.

The other day I was visiting a long-time client, who as he approaches age 70 continues to put in absurd hours when at that period in his life he should be lying about his golf handicap like most of his peers. Instead he comes into the office on most weekends even during the 1040 off season. His son works at the firm but the owner told me in all honesty that he lacks the leadership skills to carry the firm into the next generation.

So, naturally, I bring up the “M” word – merger.

By his reaction you thought I asked him to sign over his capital account to me.

Without disclosing the colorful language, which more resembled a meeting of The Teamsters than the owner of a CPA firm, it’s fair to say that he was less than enthusiastic about the idea.

“Just find me a young guy or gal (sic) and that will solve any succession problem we may or may not have.”

Good idea, with once glaring exception. Some 50,000 or so firms across the country are searching for the same exact thing – many of whom with far greater resources than were at his disposal have hired top-level executive recruiters to help them.

And often without success.

Adding to that I explained that valuations have been steadily dropping over the past several years. Those days of commanding a 1.5 multiple have gone the way of America Online or Vanilla Ice.

Still he remained defiant and signaled that he had to get back to work. Of course he did. I’m skeptical that this conversation would pick up again anytime soon.

I would be interested to see where this firm ends up in say five years. If it’s still around maybe I’ll send some of my in-laws to him for a much needed tutorial on money lending and management.