Keith Underwood, managing director of Foulger Underwood considers the problem of diverging partner aspirations when merger multi-partner accounting practices and offers tips and advice on issues to consider when partners decide to sell out
There have been two or three recent assignments which have become rather more complicated with the differing aspirations of partners when faced with a merger or sale.
The typical examples are usually found in two to four partner practices. Perhaps two of the partners wish to retire and one or two younger partners wish to continue. There is often a disparity in the equity shares and the two younger partners have been given the title ‘equity partner’ with a small equity and profit share, and a major part of their remuneration is made up with a fixed share or salary.
The issue raises the younger partners’ equity share and often the fee base does not qualify them for an equity position with the target firm. The larger firm may not recognise goodwill, therefore there is no purchase of equity on entering the equity partner group.
