Succession Planning for Business Clients

By P. Jeffrey Christakos, CPA, and Douglas Stives, CPA, Monmouth University – January 10, 2017
Succession Planning for Business Clients

As the CPA profession continues to evolve, consulting engagements offer a new way to help you serve clients and improve your bottom line. CPAs can assist business clients with determining how potential risks and threats will impact the future of the business and how to safeguard against those potential risks with succession and continuity plans.

As a testament to the importance of succession planning, the Securities and Exchange Commission (SEC) in June 2016 proposed a new rule under the Investment Advisers Act of 1940. The proposed rule would require SEC-registered investment advisers to adopt and implement written business continuity and transition plans. These plans would need to be reasonably designed to address operational and other risks related to a significant disruption in the investment adviser’s operations.

Timing is critical when determining when is the right time to start a business, and it is equally important to know when to get out. Objective thinking is crucial, and CPAs can be critical resources to help their clients decide when it’s the right time to put a succession plan in place. Often times, it may be difficult for business owners to be objective. CPAs can analyze business trends and offer knowledgeable solutions to help business owners make the best decision. CPAs can determine if the business is going in the right direction and what needs to be done to plan for the future.

When clients decide they need succession planning, the CPA can help determine how to effectively monetize their investment in the company. For many business owners, this stage offers an opportunity to create financial capital. For some, they’ll need capital to fund pension retirement obligations. This is especially true for those who have primarily focused on investing in their own businesses instead of planning for their retirement. Some business owners may find that they have created a concentrated investment risk. CPAs who specialize in personal financial planning can help their clients diversify and build a financial foundation. When business owners are less reliant on business monetization, they can make more intelligent decisions regarding the timing of their succession plan.

Successor Development

One obvious place that business owners look for successors is within the company. The skills that once were an asset for business founders might not be able to drive the company forward into the future. Finding the ideal successor depends on the stage of the company’s development. Early-stage companies tend to need people with entrepreneurial expertise and drive while more-developed companies may need people with better management skills. Family businesses often select successors by birthright and not through objective analysis. The appropriate personnel have to be identified and trained to meet the challenge, and CPAs with business advisory skills can aid in the selection and training process.

Business Transfer Issues

CPAs who specialize in business valuations can guide the pricing of their clients’ businesses and can also help them maximize the value of the business. CPAs with tax expertise can develop a transfer strategy that will be the most tax efficient. Estate and income tax issues need to be reviewed and incorporated. Personal financial planning experts may guide the client in the use of self-canceling installment notes or private annuities to receive payments for the sale. You might suggest an employee stock ownership plan if the owner is interested in including the employee base in the transfer. CPAs who specialize in merger and acqui­sition transactions can be brought in if the case warrants.

How to Get Started

If you are interested in helping your clients plan for their future, there are various programs available to help you gain the necessary expertise. AICPA programs and specialty credentials are available in the personal financial planning and business valuation areas. Visit to learn more. NJCPA has relevant interest groups that coordinate conferences and regular discussions on various topics including succession planning issues.

Douglas P. Stives

Douglas P. Stives

Jeffrey  Christakos

Jeffrey Christakos

P. Jeffrey Christakos, CPA/PFS, CFP®, is a wealth manager and principal at Westfield Wealth Management, LLC. He is a member of the NJCPA and can be reached at

More content by Jeffrey Christakos:

This article appeared in the January/February 2017 issue of New Jersey CPA magazine. Read the full issue.