Why Your Firm Has No Internal Succession — And What to Do About It
There Is No Such Thing As "Not Partnership Material"
The phrase senior practitioners use most often to explain why they have no internal succession options is also the one that reveals most about why they don't.
I have lost count of how many times I've sat across from a senior practitioner and asked whether they have anyone internally who could step into a partnership role — and been told no. Not because the firm doesn't have good people. But because, in the principal's view, none of those people are "partnership material."
It's one of the most common things I hear. And it's also, in my experience, one of the least examined assumptions in the profession.
Let me ask the question I always want to ask in those moments: when you made partner, did you wake up one morning with every skill and capability the role required? Almost certainly not. Someone gave you an opportunity. Someone invested time in you. Someone extended trust before you'd fully earned it. The question isn't whether your senior staff are partnership material right now. It's whether you're willing to develop them into it.
"The question isn't whether your senior staff are partnership material right now. It's whether you're willing to develop them into it."
The Generational Expectations Gap
When I press practitioners on what "not partnership material" actually means, the same themes emerge. The younger staff don't work the same hours. They're not introducing new clients. They want work-life balance. They don't show the same initiative. They don't have the money to buy in.
All of which may be true. But most of these reflect a difference in generational expectations rather than a genuine lack of capability. The younger generation will approach the business differently — work different hours, prioritise different things, have a different vision for what a sustainable practice looks like. That is not a character flaw. And if we are going to find future successors who offer a real alternative to an external sale, we need to be honest about whether our expectations are a genuine benchmark — or simply a mirror image of ourselves thirty years ago.
Building skills and experience. Too early for equity — the maths doesn't work yet.
The sweet spot. Enough time to repay borrowings, build equity, and realise value on exit.
The window narrows. Payback periods become difficult. Conversations should have started earlier.
What Both Sides Need to Understand
This is a conversation that runs in two directions — and it's worth being direct with both audiences.
If partnership is genuinely what you want, say so — clearly and early. Don't assume your principals know. Ask what the pathway looks like and what performance is expected. Be prepared to invest financially and in terms of the commitment ownership requires. And if the firm has no genuine intention of offering you equity, it's better to know now than in five years.
If you have good senior staff with partnership aspirations and you are not actively engaging with that conversation, you will lose them. When they leave, they take with them the client relationships they've built, the institutional knowledge they've accumulated, and the succession option you didn't realise you had until it walked out the door.
Is there a genuine pathway to partnership here, and over what timeframe?
What specific performance, skills and attributes are required before equity is offered?
How is buy-in value determined — and will I have access to an independent valuation?
What does the funding structure look like — can the buy-in be financed over time?
Who are the other partners and do we share similar values, work styles and expectations?
Internal or External — Know Your Options
Not every firm will have internal succession as a realistic option, and not every aspiring partner will find the right opportunity in their current firm. It helps to understand what each path actually looks like.
But Let's Be Honest — Partnership Isn't Right for Everyone
I've made the case for developing your people and having the conversation early. But credibility requires me to say the other thing too: not everyone should become a partner, and not every firm is worth buying into.
Equity is not a reward for loyalty or longevity. It is a business investment — and like any investment, it needs to stack up financially and make sense for the individual's circumstances. Before anyone enters into a partnership conversation, these realities deserve an honest airing.
Many senior staff are excellent practitioners who have no desire to own a business. They want challenging work, good remuneration, and career progression — not the weight of equity, staff management and practice responsibility. That is a completely legitimate choice, and firms that recognise it retain better people.
Buying into a practice often requires borrowing a significant sum — sometimes $300K, $500K or more depending on firm size. That is a serious financial commitment, particularly for someone in their thirties with a mortgage, young children and other financial pressures. The numbers need to work. A good independent valuation is essential before any buy-in conversation gets serious.
Incoming equity holders are expected to generate revenue, service clients, manage staff and contribute to practice growth — often while simultaneously repaying borrowings and building their fee base. The early years of partnership are rarely as financially rewarding as people expect. Go in with clear eyes about what the return actually looks like in years one, two and three.
Some of the most financially sound practices I've seen have failed as partnerships because the people in them couldn't work together. Differences in values, work ethic, client philosophy and decision-making style create friction that compounds over time. Culture is not a soft consideration — it is the single most important factor in whether a partnership actually functions. I've watched deals fall apart post-settlement for no other reason.
In some firms — particularly where the fee base is declining, profitability is low, or the client base is ageing — the equity on offer simply doesn't represent a sound investment. If the return after a reasonable market salary is negligible, the buy-in price needs to reflect that. We see too many incoming partners pay too much for equity in firms that can't support them. Know what you're buying and what it's genuinely worth.
None of this is a reason to avoid the conversation. It is a reason to have it properly — with independent advice, realistic numbers, and a clear-eyed view of what partnership in that specific firm actually looks like. The best outcomes I've seen come from both parties going in with full information rather than assumptions.
The firms I most admire when it comes to internal succession have one thing in common — they've made it a deliberate, ongoing process rather than something they'll get to eventually. They have identified who they want to develop, been transparent about the pathway, and are actively mentoring those people rather than waiting for them to become ready on their own.
If your first honest answer to any of those checklist questions gives you pause, that's probably a good place to start.
Whether you're planning your exit or building toward equity — we can help you work out where you stand and what to do next.
Michelle Knights — Principal, Rob Knights & CoWhat practices are selling for, and what is moving the numbers
Michelle’s monthly note on practice valuations, buyer activity and the conditions we are seeing across accounting, financial planning and legal firms.
