Principals’ retirement at risk
A new report has revealed practice principals are so busy focusing on their client base that they risk not achieving their own retirement goals.
According to the 2008 AXA Succession Report, principals underestimate the amount of time needed to sell their business, not realising that it can involve up to three years of planning.
As a result, many principals face involuntary succession; the need to sell their business for reasons beyond their control, such as disability, divorce or debt.
The report stated that involuntary succession often meant the client book was sold quickly and for less than it was worth.
Alternatively, AXA believes that “principals who see the opportunities and benefits that can flow from building and growing their business, and take early action to set up their succession plan, regardless of the market conditions, will have more options when they ultimately leave the industry, and more control over their destiny”.
The report also highlighted six key succession options every principal should consider, including generational succession, internal sale, trade sale, off-market sale, merger and initial public offering.
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