Question: How much client attrition can I expect after I merge or sell my practice?

Answer: It depends.

It depends on a variety of factors, not the least of which is your continuing level of involvement with the clients after the transaction. Additionally, it depends on what you've done as a seller after the transaction to try to jump start relationship building with the new firm. If it's a merger and you plan on retiring in two to three years, what will you and the new firm be doing to create a smooth transition of client relationships over that time period?

It also depends on the nature of your practice vis a vis the practice taking over the business. Do the two firms provide similar types of service offerings and similar levels of client service and attention, at similar rates? If you had your clients trained to expect their CPA to function as their trusted advisor, and the partners at the new firm just want to do taxes and accounting, this could be a problem for smooth transitions and retention. If your clients expect to pay significantly less than the new firm is charging, you can bet that this will limit client retention.

Similarly, how many of your people are staying with the practice after you leave? Familiar faces arguably bolster retention. Getting used to a new firm, new people, new rates and fees can be tough for clients. Before you make the decision to sell or merge, think about how compatible your practice is with the acquiring practice and what each party to the merger or sale will truly commit to in order to maximize client retention.

Succession planning is about so much more than just buy-sells and retirement policies. It goes to the heart of how you run your business. Well-run organizations should have little trouble with their succession management process.