RSS feedsHow do I tell the partners who I have worked with for more than 20 years that I don’t trust them to manage the business in my absence?
The fact that I know my partners are not good businessmen might seem a strange admission to make, but it was never really a problem until recently. Everyone has their strengths and theirs are technical. The fact that our practice has prospered over the years is as much a testament to their skills as technicians as to mine as a business manager.
As the managing partner, my role has encompassed both strategic planning and the day-to-day running of the business (WIP, debtors, cashflow, and so on) as well as taking care of my own portfolio of clients. One of my partners is also an indefatigable networker (mostly on the golf course) and brings in a steady stream of new clients, but the others stick rigidly to their areas of expertise and refuse to move out of their comfort zones.
In a modern practice this might sound like a recipe for disaster, but for us it has worked really well. At least it did until I mentioned the subject of retirement. I will be 65 next year and had expected to leave at the beginning of the year with a substantial goodwill payment. We had always agreed that, with no young partners to support a succession plan, this would be the point where we sought a merger with a larger practice. Although we are not high flyers by any stretch of the imagination, the business is healthy with a good mix of clients and we felt sure a merger partner would not be hard to find.
We started looking last year, thinking this would ensure the deal was done and the dust settled well before I was due to retire. Indeed, we attracted several interested parties and I was even starting to wonder if I might be able to sneak out of the door before Christmas when we ran into what could be an insurmountable problem.
Our youngest partner (aged 55) has been with us for many years and is really an overpromoted manager who runs our accounting and payroll services; he has never been a work-getter or a well-organised performer. We insisted that, despite his underperformance, he should remain a partner in any merged practice with all his existing remuneration arrangements in place, but the interested firms all insisted he should be ‘put out to pasture’ as part of the agreement and were not prepared to continue if he was included in the deal.
When it became obvious that we were not going to be able to conclude a deal on our terms my partners decided that the only way we could stick to my original retirement plan was to buy me out in what would effectively be an MBO. I would receive the money due to me over a three-year period and they would hope to find a merger partner at some stage in the future.
This seems to be an ideal solution, but for the fact that none of them is capable of taking over my role and running the business. They say they could each take over part of the managing partner’s duties and the business would not suffer. I can see the whole thing collapsing like a pack of cards in a year or so.
Which brings me back to my original question. As I see it, the only way I can be sure of getting my money is to ask the partners for personal guarantees which would then put all of us in an extremely embarrassing position, particularly considering the number of years we have worked together. I would hate to fall out with them after all this time, but I really must protect my own interests and I don’t see any other way to guarantee a comfortable retirement.
