Baby Boomers hang up the pencil
Baby boomer accountants have had enough. With an eye towards the exit sign, should these practitioners create an environment fit for the future or cash in?
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Replies (19)
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I always feel these sweeping generalisations are vaguely ageist. It's the accountants who are unable or unwilling to carry on learning new skills, methods and processes who are struggling, not accountants aged 55 and over.
There might be a lot of crossover between the two groups but the implied assumption is somewhat insulting to older members of the profession who are coping just fine with GDPR, MTD and other changes.
Yes, having retired at not quite 72 I enjoyed learning something new every day. MTD & GDPR were a breeze but the thrust that rich pickings abound contrasts with news of some of the big 4 shedding partners like autumn leaves.
Sweeping generalisations indeed!
I can't cope and i'm 53. Really feel like i've had enough. For the first time ever I had a client use the F word in an email to me 2 weeks ago, he had to repay his child benefit and he blamed me. He was told last year to stop taking it. He left. And then today we received a PAYE code, which out of decency I passed on..a K code..he phoned and had a go at me. Told him to call HMRC and they'd sort it as he wouldn't have such high income. No further call. Why do I still have to keep taking this. Because we need the money.
53, you youngster, wish I was 53... sigh I could run the park run really quickly in those days...
I've just activated my 5th pension fund and at 65 and 6 months am looking to exit over the next few years. Can cope with but cannot be bothered with all the cr*p we now are faced with. Don't want to let down the few clients I have left though....
You all missed the Elephant in the room.
Off payroll working will take out 10-20% of all the clients on 01 April 2020. Your Market is now Bear. We know its coming. No ones paying you for clients that are ceasing in 4 months. The loss of income will go straight to the bottom line making a huge cut to the owners income. Firms sell on profitability really, I know the agents say its turnover, but they would say that.
So I expect to see a lot of people giving up in the next 6-12 months as the last dregs of the contractors are dealt with and the principals wonder where their income has gone.
All the firms will come to market at the same time. Right where there are lots of redundancies by those not selling, 3,500 is my guess nationwide.
And you know how supply and demand works.
So if you are sitting on a pile of cash, want to expand and don't mind being a bit ruthless with some redundancies to put restructuring in place, all your dreams may just about to come true.
Otherwise you better have a plan B on what to do when the storm hits.
If you are near the GU postcode and want to beat the rush, let me know , I could be your Plan B :)
Tom McManners
Writing as an agent I can advise you that the starting point is always turnover and the due diligence process will drill down to profitability.
Supply and demand does not work as per the economics textbooks state. The mismatch in some areas where demand way outstrips supply does not drive up exit prices , but it does allow for a more optimal match much sooner.
I cope well because I delegate. Also, I offer only compliance services.
Once again, I do not relate to those in the practice advisory business.
I must thank Mr Gilchrist - he was actually responsible for me being made redundant 22 and a bit years ago.
Interesting thoughts but why buy a client base that likely reflects the demographic of the seller when setting up on your own and growing organically is so easy nowadays.
That's not to say there aren't plenty of opportunities to modernise and increase the efficiency in such a client base but recent history shows that this isn't the route most new practices are taking - merger maybe, acquisition no.
"The well-established sole practitioner is likely to have some very loyal clients who are paying far too much, he said."
Really?
I don't often see established firms charging too much, in fact nearly always too little, especially for their ling standing clients.
Am I mis-understanding something?
I see well established multi partner firms charging way too much all the time, very rare to see a small sole practitioner charging too much, as you say usually the opposite.
Such phrases are great headline grabbers and far too sweeping. Like anything there are some people overpaying or rather being under-serviced for what the fee should include.
Employment is the way to go- 1,092 hours a year inc hols with one employer, circa 110 hours a year inc hols with another , maybe room for say another 200-300 hours elsewhere (though jobs wise four employments is likely enough), no MLR, no firm manuals, no engagement letters, no compulsory CPA (though I do need to keep reading), no paying for textbooks and software (that is the employer's cost) and little demand on my evenings, Saturdays and Sundays etc.
At the end of the day, we have to remember that 2020 is pushing its mergers & acquisitions division quite heavily.
In fact, they've been pushing this kind of thing for as long as I've been aware of them - 14 years or so now? They're a remarkable outfit, in that they're very good value for CPD, and give out some great ideas, but very few of their predictions for the accounting industry come true.
This is what caught my eye...
"They can sell-up now and even stick around for two-to-three years and credit their capital account with, say, £0.5m and when they retire they can have that £500,000,” advised Gilchrist. "... what a great idea!! I'm sure someone would love to pay that for my business...in your dreams! The multiple for selling is 1: 1 remember
My father worked in his practice until he died at aged 84 years - he needed to.. it was his pension as it is mine.
Desert Orchid has the right idea.
Re Off payroll working... most general practitioners can weather the storm as they only have a few of these (as I do) .I have to say that I think MTD for income will be more of a reason for many small one man band practices for reduce/sell/hand over clients.
Looking for a block of clients is a long drawn out process. I started looking about 3 years ago and sourced 4 with due diligence etc before finding one that I was comfortable with.
But if anyone is thinking of selling you cant do wrong than speak to Nicola Hinks of Draper Hinks - she knows everything there is to know about selling and buying of accountants practices.
and no... Tom you cant have my business ):... post code GU21...
1:1 - not everywhere , you may need to get out and about a bit beyond GU
What is happening is that practices that are not tip-top or got too much baggage are slipping below 1x but good 'uns in the right postcode ( GU anybody ? ) are 1.2x or even a wee bit more with the right agent negotiating