Transition FAQ

What is the basis for most relationships a CPA firm has with their clients and staff? The main reason a person or business chooses a firm (or as a career) is a personal comfort with the firm and its people. With this personal comfort level comes trust and confidence. This can best be described as “partner loyal” clients, which is what most small firms are. Some larger firms may have “brand loyal” clients. Clearly brand loyal clients are more easily transitioned than partner loyal.

The key elements clients and prospective clients look for in most firms include personal chemistry, location, method of providing and types of services, fee structure, and the general culture of the practice. In some cases, clients also consider unique attributes such as ethnic or language considerations, niche services, specialized knowledge and technology capabilities.

When choosing a firm to work for, people consider compensation, culture, professional growth opportunities, working hours, environment, and work conditions, among others.

Once you understand the reasons clients and staff have chosen your firm, you can focus the transition plan on the attributes associated with your firm’s value and then match those attributes with those of the new firm. The main objective of a transition plan should be to de-emphasize what will be changing, and emphasize what is of value in the predecessor firm that will remain and what will be gained from the new affiliation.

Transition of clients and staff are key components of a successful affiliation whether you are acquiring a practice or selling your own.

For many years, CPAs would just sell their practice. An outright sale of a practice does not often produce the greatest financial reward for any one. An outright sale provides little or no transition of the client relationships, which is the only reason another practitioner would have an interest in acquiring your practice. Effective transition takes time and opportunity. Often a client relationship is also a friendship. Be respectful of that relationship and the trust they have placed in you.

The more comfortable the acquirer is, the more likely s/he will keep those relationships and the more value your practice has to them. Often a staff member is a key component of that client relationship. Strategic transition of both staff and client relationships will provide a much better reward, both financial and emotional.



  • Staff Transition and Retention Tips
    The comfort and continuity of a transition begins and ends with one word - COMMUNICATION. How you communicate the benefits and advantages of the merger or sales of your practice to staff and clients will produce a ripple effect that cannot be stopped. If the communication is done poorly or is incomplete the staff will become concerned and unsure of their job stability. Clients will detect this. If clients are sensing something is wrong or are not comfortable, retention and continuity of their relationship with you comes into question. Lack of retention produces a declining financial value for all involved in an affiliation. Transition Advisors, LLC has created a transition document for use with staff and clients. The transition document identifies talking points that should be covered when announcing the change to your staff. Before making the announcement you should consider:
    • Whether to announce to a group or individually
    • If in a group, consider what should be said to the group and what should be said in the individual follow-up sessions
    • What you should or should not tell the staff about the new firm
    • Whether or not you should have members/partner(s) of the new firm at the meeting
    • When staff should be notified
    A botched transition strategy guarantees everyone will lose, which is not a good situation for anyone - you, the clients, staff or successor firm - at such an important time. The timeless phrase, "You only have one chance to make a good first impression" particularly holds true for a merger or succession announcement. At a minimum the following retention points should be clearly planned and communicated:
    • Plan the transition as far in advance as possible. Most clients assume that even though changes have occurred, such as name, location and size, if the people they have been dealing with in the past aren't changing, there won't be any detrimental effects to the way they are being served.
    So the key to introducing a transition from one firm to another firm is when key people, normally the partners, will be around during the transition to maximize the advantage of having that person involved. (Many clients are only seen once a year with a face-to-face interaction. If a key person is five years from slowing down, that's only five visits with these clients so start the transition quickly to guide and manage it properly.) Consider any pending loss of key staff that has a deep relationship with clients and transition those clients with the staff members that will be their replacement.
    • Set the stage for a transition with key players. Most firms do not consult with clients prior to making a transition as they assume that clients will go along with the change. High-level clients may appreciate being told in advance about the new affiliation before actual closing. The same would hold true for key staff. Be careful that the news is kept confidential and continue to keep these key clients and staff informed as the process moves forward or breaks up. There are risks in sharing this information too soon that need to be considered as well.
    • Communicate the change clearly to everyone involved. Keep in mind what is important to clients and staff. Emphasize what won't change and minimize the impact of what needs to change. Paint a picture of why they will benefit from what is new. Don't make the mistake of assuming clients will know what is and isn't changing. Important points to be properly delivered include (1) who they will be working with in the future (2) fee structure (3) new location (4) capabilities and services.
    If staff is being retained they need to be assured that their compensation, benefits and role will remain unchanged and their future prospects are brighter. If adjustments in compensation and benefits are needed, consider making that change over time. Be quick, honest and open in your communication with staff. Let them know the playing field - tell them how they fill an important role in the successor firm's goals. For more information on client and staff issues in a transition:
    • Keeping it Together: Plan the Transition to Retain Staff and Clients (Part 2 of 2) by Joel Sinkin and Terrence Putney, Journal of Accountancy, c2009
    • The Long Goodbye by Joel Sinkin and Terrence Putney, Journal of Accountancy, c2013
  • Client Transition and Retention Tips
    Much of the same communication points for staff hold true when announcing a merger to your clients. There are a few different twists obviously. Client retention has its foundation in the reasons a client chose you or your firm to provide services to them. A client selects a firm based on chemistry between client and accountant, location of firm's office, cost and perceived value of services, professional expertise and trust. The announcement of the merger or acquisition may cause clients to ask:
    • Will my relationship with the firm change?
    • Will the partner I have been dealing with still be there?
    • Will my fees increase?
    • Will the staff I am used to dealing with and procedures I am accustomed to working with remain the same?
    • Will the firm's location still be convenient?
    Addressing these concerns is critical to client retention in the merger/acquisition announcement. You need to reassure them that the things they depend on will not change. You need to emphasize continuity regardless of what is changing, focus on things that are not changing and stress what the client is gaining rather than losing.
    • Time the announcement. Timing lends critical support to client retention and transition. Decide when various clients should be told. All clients should be informed fairly close to when the formal announcement will become public news. How and when you make the announcement depends on the importance of the client to the firm and the amount and timing of interactions with the client.
    • Craft the message. Whether you communicate with clients in person, by letter or by phone, make sure you send a consistent, positive message about the transaction. Talk about how the merger/acquisition benefits the client. Focus on things that will not change such as staff, fees and client services, and promote new or specialized services that will be offered and the additional services and benefits this new affiliation will create.
    • Determine how to deliver the message. The importance of the client will dictate how the announcement is made as well as when it is made: a personal visit or a phone call by the partner. Deliver the message in a way that allows you to respond to key questions in order to reinforce to the client that he/she is important to the firm. The largest clients are traditionally told in person; others via the phone and yet others through the announcement letter.
    • Introduce the successor or merger partner(s). A personal introduction by the existing partner of the successor to the client helps assure an effective transaction. In addition to introducing the successor, defer to him/her whenever possible and allow them to take charge on issues during the transition process while still holding out the illusion (or reality) that you are still involved.
    • Involve both firms in the communication process. Little things can make a difference in perception. Mailing the announcement letter in the predecessor's envelope but writing it on the successor firm's letterhead ensures the letter will be opened and sends a powerful but subtle message about the transition.
    • Time commitment of the seller to the transition. In order for a successful transition, sellers need to spend time seeing clients and remaining available for consultation via phone and email in order for the clients to perceive no difference in the relationship. Planning an appropriate amount of face time to ensure a proper transition for larger clients is key.
    • Focus on continuity of service. This is critical to retaining clients. Retain contact information such as phone and fax numbers, domain names and email addresses for at least a year. It is simple and easy to use forwarding features for both email and telecommunications. Answer the acquired firm's phone number on a dedicated line with a custom greeting that uses both firms' names. When you intend to stop this practice send another merger announcement letter but this time the message should focus on how wonderful the past six months (or year) has been and the wonderful growth experienced by the combined firm. In this letter again announce the new phone numbers and email addresses and suggest clients update their records.
    • Maintaining service and billing methods. Don't immediately change work process and billing systems, wait until clients are comfortable with the new firm. If changes must be made soon after the affiliation, make them slowly and focus on those with significant priority.
    For more information on client and staff issues in a transition:
    • How to Maximize Client Retention After a Merger by Joel Sinkin and Terrence Putney, Journal of Accountancy, c2014
    • Keeping it Together: Plan the Transition to Retain Staff and Clients (Part 2 of 2) by Joel Sinkin and Terrence Putney, Journal of Accountancy, c2009
    • The Long Goodbye by Joel Sinkin and Terrence Putney, Journal of Accountancy, c2013
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