When two brothers who had built a successful Brisbane accounting practice together found themselves locked in a bitter dispute that was destroying their business, it seemed like the 25-year family partnership was heading for disaster. Their story demonstrates how professional intervention can transform destructive conflicts into mutually beneficial outcomes.
This case study reveals the hidden costs of partnership disputes and shows how structured resolution processes can save practices from devastating breakups.
The Partnership Breakdown
Brothers Michael and Andrew Walsh* had operated Walsh & Associates for 25 years, building it from a suburban startup into a respected firm generating $1.4 million in annual fees. However, by 2023, their relationship had deteriorated to the point where they communicated only through staff and were actively undermining each other’s decisions.
The Core Conflicts
Strategic Direction Disagreements Michael wanted to expand through acquisition and hire additional senior staff, whilst Andrew preferred organic growth and maintaining tight cost control. These fundamental differences paralysed decision-making and prevented the practice from adapting to market changes.
Financial Disputes Disagreements over profit distributions, reinvestment priorities, and personal drawings had created ongoing tension. Andrew felt Michael was taking excessive drawings, whilst Michael believed Andrew was being unreasonably conservative about investment.
Client Relationship Issues Both brothers had developed separate client bases over the years, but increasing competition for resources and conflicting advice to shared clients was damaging relationships and threatening retention.
The Destructive Impact
By mid-2023, the partnership disputes were causing serious damage:
Financial Deterioration
- Annual fees declined from $1.4M to $1.1M as client service suffered
- Profit margins dropped from 35% to 18% due to operational inefficiencies
- Practice valuation fell from estimated $1.5M to under $800K
- Several major clients terminated relationships due to poor service
Staff Exodus
- Three senior staff resigned due to the toxic working environment
- Remaining staff were stressed and demotivated
- Recruitment became difficult as the practice’s reputation suffered
- Productivity declined significantly across all service areas
Market Position Erosion
- Competitors gained several key clients
- Referral sources began recommending other practices
- Marketing and business development activities ceased
- Professional relationships deteriorated throughout the Brisbane market
The Intervention Process
When the brothers finally recognised their practice was failing, they engaged SMF to help resolve the situation. Initial discussions revealed both wanted to preserve value but neither could see a path forward.
Professional Assessment SMF conducted a comprehensive review including:
- Practice valuation and performance analysis
- Individual and combined contribution assessment
- Market position and competitive analysis
- Staff and client relationship evaluation
Mediation and Options Development Rather than immediately recommending a breakup, SMF facilitated structured discussions to explore all possible solutions:
Option 1: Restructured Partnership
- Clearly defined roles and responsibilities
- Formal decision-making processes
- Separate client management spheres
- Professional management oversight
Option 2: Staged Separation
- One brother gradually buying out the other
- Transition period to maintain client relationships
- Non-compete and cooperation agreements
- Structured payment terms
Option 3: Third-Party Sale
- Selling the entire practice to external buyers
- Equal distribution of proceeds
- Employment agreements for both brothers
- Clean break from partnership tensions
The Resolution Strategy
After extensive discussion and professional guidance, the brothers chose a hybrid approach combining elements of staged separation and restructuring:
Year 1: Operational Restructuring
- Implemented formal governance structure with external advisory board
- Clearly separated client management responsibilities
- Established systematic decision-making processes
- Brought in professional practice manager
Year 2: Performance Recovery
- Focused on rebuilding client relationships and service quality
- Recruited replacement senior staff
- Implemented efficiency improvements and technology upgrades
- Developed growth strategy based on agreed direction
Year 3: Ownership Transition
- Michael purchased Andrew’s 50% share based on improved valuation
- Andrew remained as senior advisor for 18 months
- Structured payment plan over three years
- Non-compete agreement protecting both parties’ interests
The Remarkable Turnaround
The structured resolution process achieved outstanding results:
Financial Recovery
- Annual fees recovered to $1.6M (14% above pre-dispute levels)
- Profit margins improved to 38% through better management
- Practice valuation reached $1.9M at transition
- Both brothers achieved strong financial outcomes
Operational Excellence
- Client retention recovered to 96%
- Staff morale and productivity improved dramatically
- New senior staff provided fresh expertise and energy
- Systematic processes improved service delivery consistency
Relationship Restoration
- Brothers rebuilt personal relationship through professional mediation
- Family gatherings resumed without business tension
- Professional collaboration continued during transition period
- Both parties felt fairly treated throughout the process
Critical Success Factors
Several elements were essential to achieving this positive outcome:
Early Professional Intervention SMF’s involvement before the situation became irreparable allowed for solutions that preserved value for both parties.
Structured Process Following a systematic approach to dispute resolution prevented emotional decisions and kept focus on practical solutions.
External Mediation Having neutral professional facilitators enabled honest communication and objective analysis of options.
Financial Transparency Comprehensive valuation and financial analysis ensured both parties understood the real costs of continued conflict.
Common Partnership Dispute Triggers
This case highlights typical issues that can destroy accounting practice partnerships:
Succession Planning Failures
- Different retirement timelines and expectations
- Inadequate planning for ownership transitions
- Disagreements about bringing in next generation
Strategic Vision Conflicts
- Growth versus stability preferences
- Risk tolerance differences
- Investment priority disagreements
Compensation and Distribution Issues
- Unequal contribution perceptions
- Drawing and profit distribution disputes
- Personal financial pressure influences
Control and Decision-Making Problems
- Unclear authority and responsibility divisions
- Communication breakdown
- Ego and personality conflicts
The Cost of Unresolved Disputes
Research shows partnership disputes can devastate accounting practices:
- Average 30-40% value destruction during prolonged conflicts
- Client retention rates dropping below 70% in severe disputes
- Staff turnover increasing 200-300% during conflict periods
- Recovery taking 2-3 years even after resolution
Prevention Strategies
SMF recommends proactive measures to prevent partnership disputes:
Clear Partnership Agreements
- Defined roles and responsibilities
- Decision-making processes
- Dispute resolution mechanisms
- Exit and succession planning
Regular Communication
- Scheduled partner meetings
- Annual relationship reviews
- Professional facilitation when needed
- Open discussion of concerns before they escalate
Professional Governance
- External advisory boards
- Independent performance reviews
- Mediation resources
- Legal and financial advice access
How SMF Can Help
At Sell My Firm, we have extensive experience resolving partnership disputes in Australian accounting practices. Our services include:
- Conflict assessment and resolution planning
- Professional mediation and facilitation
- Valuation and financial analysis
- Restructuring and separation alternatives
- Implementation support and monitoring
Whether your partnership is experiencing minor tensions or major conflicts, early professional intervention can prevent value destruction and preserve relationships.
Don’t let partnership disputes destroy what you’ve built together. Contact SMF for confidential guidance on protecting your practice and resolving conflicts constructively.
*Names have been changed to protect client confidentiality.