THE PARTNERSHIP Archives - Page 4 of 62

What Firms Should Address in Partner Agreements

August 3, 2023

… and what partner candidates should know before they sign.

By Marc Rosenberg
How to Bring in New Partners

What is a partner agreement?

According to nolo.com, “A partner agreement spells out the rights and responsibilities of the firm’s owners. Without one, firms will be ill-equipped to settle or avoid conflicts because if certain key passages are missing or written improperly, the courts will intervene in ways that the partners may not like. A partner agreement allows the firm’s partners to structure their business relationships with each other in ways that suit their desires, needs and preferences.”

MORE: Six Systems Used to Determine Partners’ Goodwill Payments | How Partner Buyouts Work | What Buying In Actually Means | How Partner and Staff Actions Impact Profits | Nuts and Bolts of Mentoring Staff | Nine Ways to Measure Staff Performance on the Path to Partner | Sixteen Duties of a Partner
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Any post on partner agreements will have an obligatory paragraph like that. Here is a more in-depth description that may be illuminating.
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Why Firm Culture Matters for Partners

August 1, 2023

By Martin Bissett

With insight from our exclusive expert council: Dunn, Pipe, Grundy.

By Martin Bissett
Passport to Partnership

The Passport to Partnership study collated a number of responses from existing partners of accounting practices in a conversational style.

MORE: Five Ways to Rally Your Firm to Its Culture | Three Questions About Your Competence | 10 Can’t-Skip Steps for Business Development | Attract Clients, Don’t Chase Them | Success in Business Comes Second | Business Won’t Come to You
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Examples that really stood out on the realities of individual variances in firm culture are showcased below.

“Our partners have articulate minds, and that’s what we want to be demonstrated by any new appointees.”
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Six Systems Used to Determine Partners’ Goodwill Payments

July 20, 2023

By Marc Rosenberg

ALSO: 28 main provisions of partner buyout plans.

By Marc Rosenberg
How to Bring in New Partners

This chart shows the different systems that firms across the country are using for partners’ goodwill payments. The data is from a recent edition of The Rosenberg MAP Survey.

MORE: How Partner Buyouts Work | 11 Best Practices for Partner Compensation | Why Buying Into a Firm Is Such a Great Investment | The Business Side of CPA Firms | It Shouldn’t Take So Long to Make Partner | Three Types of Skills You Need to Become a Partner | Seventeen Basic Expectations of Partners
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Six Systems Used to Determine Partners’ Goodwill Payments

Three Questions About Your Competence

July 18, 2023

By Martin Bissett

How do others view your partnership readiness?

By Martin Bissett
Passport to Partnership

The Passport to Partnership study collated a number of responses in a conversational style.

MORE: Competence Is Step One of Seven | When Would-Be Partners Aren’t Candidates | Make Your Expertise a New-Client Magnet | Don’t Think of It as Selling | Experts: What It Takes to Become Partner | Where Is Your Next Money Coming From? | Your Website Promises. Do You Deliver?
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But two brief but succinct examples on the realities of how a firm assesses an individual’s “competence” for leadership are showcased really stood out:

They need to explain technical data to me in a way that I know they understand.
What kind of lifestyle does this person have outside of work? We’ll be looking at Facebook, Twitter, and Google to find out.

How Partner Buyouts Work

July 13, 2023

By Marc Rosenberg

Three big issues must be decided.

By Marc Rosenberg
How to Bring in New Partners

One of the benefits that new partners receive in exchange for their buy-in is that they will receive a buyout when they retire. This amount can be in excess of a million dollars at many firms. Receiving a retirement buyout is one of the major reasons becoming a partner is so lucrative.

MORE: 11 Best Practices for Partner Compensation | Fifteen Steps to New Partner Buy-in | What Buying In Actually Means | Why Buying Into a Firm Is Such a Great Investment | Four Philosophies for Managing a CPA Firm | How Partner and Staff Actions Impact Profits | The Business Side of CPA Firms
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The flip side of this is that new partners must agree to buy out older partners when their day comes. Therefore, any plan for bringing in new partners must include a provision for a partner retirement/buyout plan.
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Competence Is Step One of Seven

July 11, 2023

By Martin Bissett

What to do after the prerequisites.

By Martin Bissett
Passport to Partnership

Staffers aspiring to be partners must learn the key characteristics of successful partners. They also must learn how to develop their own personal plans to achieve partnership. Firms and staffers alike need a clear set of procedures, processes and milestones for turning top talent into the next generation of firm leadership.

MORE: When Would-Be Partners Aren’t Candidates | 10 Can’t-Skip Steps for Business Development | Attract Clients, Don’t Chase Them | Success in Business Comes Second | Business Won’t Come to You | Forged in Fire: The Pains of Leadership | A Lesson in Customer Service and Reputation | Prioritize Your Prospects | Good Enough Is Not Enough
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There are seven critically important criteria by which partners assess partners-to-be. I call them:

The Seven C’s

1. The first is Competence. As a prerequisite, but only a prerequisite, accountants must master their technical abilities and qualifications, whether it be audit, tax or management accounting. Whatever your area of specialty, as a staffer the partners expect you to be able to know at least as much as anyone else who may report to you.
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When Would-Be Partners Aren’t Candidates

July 4, 2023

By Martin Bissett

What we’ve got here is failure to communicate.

By Martin Bissett
Passport to Partnership

Have you ever wondered what the partners of your firm are looking for from you, beyond your technical abilities?

MORE: 10 Can’t-Skip Steps for Business Development | Three Things That Rich Accountants Do | Four Reasons It’s Hard to Sell | Eight Questions to Hold Yourself Accountable | Win Your First Client: Yourself
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For full disclosure, I am not an accountant, but I have spent decades working with accounting firms of all shapes and sizes in the United Kingdom, the United States and Europe.
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11 Best Practices for Partner Compensation

June 29, 2023

By Marc Rosenberg

BONUS: Seven systems to allocate income … and who uses them.

By Marc Rosenberg
How to Bring in New Partners

It would take a book much longer than this post to properly explain the finer points of partner compensation, especially how each of the major compensation systems works. Oh, did I forget? We wrote such a book, “CPA Firm Partner Compensation: The Art and Science.”

MORE: Fifteen Steps to New Partner Buy-in | What Buying In Actually Means | How Partner and Staff Actions Impact Profits | Nuts and Bolts of Mentoring Staff | Nine Ways to Measure Staff Performance on the Path to Partner | Sixteen Duties of a Partner | Five People to Keep Out of Partnership
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Best Practices and Key Concepts

As is the case with all of my lists, no one firm incorporates all of these practices in its partner compensation policy. But I have observed all of the practices below in one or more of the best firms I’ve worked with over 20 years.

Performance-based. There should be a strong link between pay and performance. When it comes to CPA firm performance and profitability: As the partners go, so goes the firm. The partners have a much greater impact on the firm’s success than professional staff and other personnel. If they perform at a high level, the firm will do the same. If partner performance lags, then the firm will suffer. Therefore, the firm needs to motivate the partners to produce at high levels and reward them accordingly. Compensation isn’t the best way to motivate anyone’s performance, but it is effective.