Continuity in the face of tragedy
M&A WATCH
By August AquilA And stephen Weinstein
Preparing for the sudden death or disability of a key partner
anticipating many years before any planned
retirement. Suddenly, in mid-June, he began having some cognitive problems, so he
went to his doctor. He was diagnosed with a
terrible terminal illness and was given two
months to live. He deteriorated rapidly and
died in August. His spouse and attorney tried
desperately to salvage his practice. The best
they could do was to sell it to a nearby two-partner firm on a retention basis. In the end,
the spouse ended up with the equivalent of
about 40 percent of the practice value and
significant legal bills.
AtlAntA
Aarons Grant & Habif merges in
Donner, Weiser & Associates
Details: Aarons Grant & Habif LLC
merged Donner, Weiser & Associates
into its Atlanta-based practice in July,
increasing the firm’s size to over 75
professionals. All 10 DWA professionals
were retained, including four partners.
Financial details of the transaction were
not disclosed.
HAWAii
PKF Pacific Hawaii buys
Grant thornton’s Hawaii practice
Details: PKF Pacific Hawaii LLP has
acquired Grant Thornton LLP’s Honolulu
office, re-establishing a Hawaii presence
for PKF North America and PKF International. Financial terms of the transaction
were not disclosed.
While there are some things you can control, there are many
more that you cannot. the real issue is not what you can control or not, but how you react to these type of disasters, and
how well your firm carries out its “contingency plan” (if it has
one). the difference may mean the firm’s survival (and retention of its asset value).
KAnsAs
BKD buys Grant thornton’s Wichita
health care practice
Details: BKD has acquired Grant
Thornton’s hospital and health care
auditing practice in Wichita, adding eight
people and doubling the size of its health
care auditing practice. Financial terms
were not disclosed.
It is assumed, but not always the case, that
larger firms (six or more owners) can withstand the loss of any one partner. However,
partners from these larger firms can still learn
from this article, since many of the ideas can
relate to other types of contingency planning
matters (e.g., fire or natural disasters).
We all like to believe that death or permanent disability is not a near-term possibility,
but we also know that these types of events
are unpredictable and can happen to any one
of us at any time. Contingency planning deals
with how we would respond to one of these
events. How adequately prepared are you to
deal with situations such as the following if
they were to happen to your firm?
The firm’s managing partner, who has
been the driving force behind the success of
a four-partner firm, is tragically killed in an au-
tomobile accident. He was the firm’s primary
rainmaker and also the relationship partner
with many of the firm’s major clients. One of
these clients has already called wanting to
know how his company can continue to be
serviced without that partner.
UNDERSTANDING THE RISKS
Risks fall into t wo broad categories — sudden
(immediate and a surprise), and longer-term
(which result from a deteriorating/evolving
situation). The sudden risks occur due to
an unpredictable event resulting in an immediate need to “replace” a lost person or
respond immediately to some event. This
includes a sudden death or disability event
(e.g., due to an accident or a stroke). A longer-term event occurs based on a deteriorating
situation, which may or may not have been
known about. This includes an alcohol/drug
problem, marriage break-up, a serious family
health issue (such as the illness of a spouse
or child), or psychological trauma.
Gilpin sells practice
Details: Tax and accounting firm Davis
& Bellomo has acquired the accounting
practice of Gordon Gilpin, CPA, a sole
practitioner in Leawood. Gilpin, who is 68
and wants to retire at 70, interviewed 12
firms before selecting Davis & Bellomo.
He has begun working from the firm’s
Overland Park offices as a consultant.
This is Davis & Bellomo’s first acquisition.
A TRUE STORY
A sole proprietor in his late 50s was operating for over 20 years with two part-time staff,
neither of whom were candidates to take over
(or buy) his practice. He had no succession
or contingency plan and no practice continuation agreement, but was in “good health,”
BUILDING A PLAN
The process of developing an effective contingency plan can be broken down into five
key areas:
Identify your needs. While you won’t
be able to have a contingency plan for every
potential disaster, you need to identify for
your firm the highest vulnerability — people,
technology, clients, quality, etc.
Make an impact assessment. Next, if
such a disaster were to occur, what is the
likely impact on the firm, clients, employees
and owners?
Select suitable measures and controls.
What specific preparedness steps should the
firm implement now?
Develop recovery strategies. What
will it take to recover from the disaster and
what will be your firm’s strategy? Recovery
strategies enable operations to be rapidly
KentucKy
Mountjoy chilton merges in Hawkins
Details: Mountjoy Chilton Medley has
merged in Louisville-based Hawkins Co.
CPAs LLC. This merger brings Mountjoy
Chilton Medley’s employee count to approximately 240 and the number of CPAs
to over 130. The firm has offices in Louisville, Lexington, Covington, Frankfort
and Bowling Green. Hawkins Co. CPAs
was formed in August 2005, and had 15
employees.
