Academic journal article Journal of Accountancy

Keeping It Together: Plan the Transition to Retain Staff and Clients

Academic journal article Journal of Accountancy

Keeping It Together: Plan the Transition to Retain Staff and Clients

Article excerpt


* When a merger or acquisition takes place, clients are chiefly concerned about who their accountant will be, if their fees will change, and if the office location will be convenient.

* Top staff worries include job security, changes in compensation and benefits, and restrictive employee agreements.

* A smooth transition that results in retained clients and staff carefully addresses all concerns.

* In the initial stages of the transition, care should be taken to make changes slowly so clients and staff can become acclimated to the new firm's operations.



Retirement, health issues for an owner, the desire to grow--all of these are reasons firms engage in mergers or acquisitions. Most firms decide to merge or acquire only after considerable analysis of financial and professional outcomes. Last month we gave general advice for ensuring a merger or acquisition goes smoothly. But a firm's ability to make a successful deal depends not only on deal structure and due diligence but also on the successor firm's ability to retain clients and staff. Unfortunately, an agreement between the partners of two firms to combine has nothing to do with whether staff and clients stay or leave.

This article looks at the challenge of retaining clients and staff immediately after the merger. Retention should be addressed through a properly designed and executed transition plan, which should be divided into two retention sections: clients and staff.


A client generally selects a firm based on chemistry between the client and the accountant, location of the firm's office, cost and perceived value of services, professional expertise, and trust. The announcement of the merger/acquisition deal may force clients to deal with the broad concern, "Will my relationship with the firm change?" More specifically; their worries relate to the reasons they selected the firm:

* "Will the partner I have been dealing with still be there?"

* "Will my fees increase?"

* "Will the staff I am used to dealing with and procedures I am accustomed to working with remain the same?"

* "Will the firm's location still be convenient?"

Addressing these concerns is critical to client retention. The message you deliver in the merger/acquisition announcement must speak to the issues--and at the same time reinforce the reasons clients initially chose your firm over others. Whenever possible, when you inform clients about the transaction, reassure them that the things they depend on will not change; emphasize continuity regardless of what is changing; focus on things that are not changing; and stress what the client is gaining rather than losing.

Your client transition plan should list action steps in these areas:

1. Timing of the announcement. Decide when various clients should be told of the transaction. Generally, all clients should receive a formal announcement fairly close to when the news becomes public to assure they are given the information they need so they will support the deal. How and when you make the announcement, however, depends on the importance of the client to the firm and the amount and timing of interactions with the client.

Your best clients (usually measured by size of annual fees, or importance to the firm in other ways such as a referral source or stature in the community) may be told about the pending combination before it is consummated. If your firm has a number of annual clients (such as individual tax clients), consider waiting to tell them about the deal until close to the time of their annual visit to the firm (for example, when tax organizers are sent out). This approach minimizes the time during which clients may make assumptions about what the combination means to them and consider an alternative to their current service provider. …

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