Today’s Succession Market – A Harsh Reality

Two months ago, my neighbor of more than 20 years hung out a “For Sale” in front of his house. He told me it was time. His children were grown and out of the house and he was closing in on retirement from his job with the county. His wife had retired just months before. He had set his sights on North Carolina and showed me the blueprints for his retirement home.

He was one of those true do-it-yourselfers, he mowed his own lawn, repaved his own driveway and installed a new front door. His home was always immaculate, and I assumed it would sell immediately.

Nope.

The sign is still out and despite a few nibbles no one has made a concrete offer. I asked him what the problem was, and he said the realtor told him that it was truly a buyer’s market and home shoppers could be a lot more selective than even as recently as five years ago.

So, he waits and waits and waits for an offer that hopefully will come before the New Year.

Which in a roundabout way sort of brings me to the accounting marketplace – particularly regarding succession and M&A.

This week I had to have a painful heart to heart with a practitioner in his mid-70s – a sole owner with no succession plan. When I asked him our $64,000 question about how many more years he wanted to work full time – he simply replied “forever.”

That’s when I had to give him the “buyer’s market” speech and how valuations have been steadily dropping for several years and as unfair as it may seem, no firm is going to allow a practitioner comfortably in his 70s to remain on the payroll forever. Not when many have a mandatory retirement age and thus have to tell a 25-year employee they must step down at such and such and age and yet have to justify keeping someone nearly a decade older on full time.

Far be it from me to dictate how long someone can work simply because of the date on their birth certificate – in fact my own father worked until he was almost 80. But sadly, the realities of the market have to be addressed and continuing in his current capacity ad infinitum was simply not going to happen. If he insisted on his timeline then I had to be honest and tell him that we could not help.

I wish this was an outlier in terms of a succession scenario but unfortunately, it’s too common and I’m forced to let the hammer down.

Like I said, I didn’t create the current marketplace, I just have to function within its realities – fair or not.