I don’t think anyone really retires, in the sense, they do 'nothing' going forward, but, when / how do Accountants calculate it's time?
I know a lot of us at, peak times / busy times, would like to retire, right then, during those moments or would love the COVID travel restrictions to be lifted so we could get away but in reality those ‘twangs of pain’ pass.
What we are looking at is why the ‘so called’ optimal age to retire is 65… or is it sell… or is it just completely irrelevant?
As part of your strategy sessions whilst you think about, ‘Where to from here?’ , or ‘What is my / our end-game / goal?’ Stay flexible and add these following paragraphs into the discussion:
Selling your accounting firm at 65 means to the buyer you are less risky but the client base is old. The client base average is 10-15 years either side. Yes, that means 50~80 years of age for the client base. I’ll let you guess on which is more lucrative.
But, just in case you thought an older client base wasn’t sellable, think again. The reality of our ageing population means a smart estate planning service might be ‘low-hanging fees’ in the future. with the opportunity to make ways into the next generation.
Selling your Accounting Practice before 65 is optimal for the big players as a risk reduction strategy. They want a longer opportunity with the younger client base. We have seen practitioners as young as 40 turn up and ask for help in divestment. Keep in mind, this generally will trigger stronger, more stringent terms, due to the fear of what may happen in 5 or 10 years time vs the 65yo. The terms may seek for ongoing equity and / or longer payout timeframe of the clawback.
The optimal time to act is always ‘NOW’ (it’s a sellable asset – don’t forget it, work it) with 60 as your reminder alarm clock, 65 as your, time to act fast or join / merge with another crew and pass the baton. And then there is is always the understanding, that, maybe, just maybe, it’s ok not to sell and to just sail on, remaining relevant to you clients and being happy with the decision.
Remembering, stay flexible, seek cultural fit – every opportunity is different and terms are there to be negotiated.
Nothing wrong with working at 80 ! Nothing wrong with planning to sell today. The important point is to know the journey as an accountant, the during and the after. Plan to win, you can.
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Magnus Yoshikawa 0408885944