Exit options for partners when succession hasn’t worked out 

Partners looking to retire without succession lined up face considerable challenges and the prospect of letting go of their legacy can be stark. Contrary to how it might feel, there are multiple options available in this scenario that can help the outgoing partner realise their goals.

This article explores some of the options available when succession planning has not gone to plan:

Sale to a competitor or strategic buyer

Where a sole owner or the entire management team are looking to exit, a trade sale is a common option. A key consideration for a sale will be how wide the partners wish to cast the net; full market coverage will likely generate greater interest and thus competition, while at the other extreme, a subtle approach to a single interested party will help keep confidentiality as well as reduce costs.

Potential suitors will often be looking for factors such as; cultural alignment, the age of the client base, well documented procedures, and high quality of management information. Approaching the right parties with solid financials, strong potential synergies and cultural compatibility is vital here. 

Private equity (PE) acquisition or investment

Professional services firms (particularly law and accountancy practices) are currently highly sought after by PE firms, being attracted by their recurring revenue structure and potential for scale. Recent high-profile cases include LDC’s investment in Harper James and Cinven’s stake in Grant Thornton UK, both completing in 2025. 

Private equity can offer the firm access to capital for tech investment, scaling up and talent acquisition. PE firms have differing criteria as to whether they want to take a full or partial stake in the firm. Selecting the right PE partner is important in meeting the owner’s needs, whether that involves one, a few or all owners’ stepping away from the business. 

Bringing in external partner hires

A preferred route for succession may be to bring in external partner hires, particularly where the internal management team is not ready to take over. When an external management team purchase a controlling stake in the firm, this is referred to as a Management Buy-In (MBI). This option can bring fresh perspectives and new strategic and operational nous. 

Retiring partners staying on in a consultancy or part-time role

Similarly, if a management team need further guidance before running the firm independently, a Management Buy-Out (MBO) can be an option. In this situation, an exiting partner can sell their stake but stay on in an advisory role, this will likely involve reducing their days. The partner can then mentor the management team until such time as they are ready to run the firm. This route can help maintain firm identity and culture as well as ensuring business continuity.

Employee ownership trusts (EOTs)

EOTs are an option available to limited companies. With a slightly longer time horizon for planning, a partnership can be converted to a Limited company and then sold on to an EOT. This may be appropriate where perhaps the existing management team are not quite ready to run the firm independently and could benefit from the outgoing partner mentoring them. The EOT is set up solely for the benefit of the employees. This structure presents a tax-efficient way for a senior individual to exit the business. For example, there is an exemption from capital gains tax on 50% of the gain when a business owner sells a controlling interest in their company to an EOT. This exit route can also preserve legacy and enhance employee engagement.

How we can help

As corporate finance advisors, our priority is to help clients exit their business seamlessly and assist them through what is always a major milestone in their career. 

Stepping away from a firm is a significant and often emotional milestone. Our deep understanding of the professional services sector, combined with hands-on experience supporting partners through every stage of the exit journey, ensures you feel supported, confident and in control throughout the process. If you would like to learn more, please get in touch.