Ira Rosenbloom: With M&A, Nobody Wants a Fixer-Upper
Buyers want sellers who invest in the long game.
The Disruptors
with Liz Farr
M&A
Robert Fligel: Private Equity Shakes up M&A
Opportunity or threat? It depends.
^ Unmute for sound and adjust the volume
Subscribe to CPA Trendlines podcasts anywhere: Apple, Google, Spotify, iHeart, Deezer, Amazon Music and Audible, Player FM, Audacy, Gaana (India), and Boomplay (Africa).
With Rick Telberg
For CPA Trendlines
Private equity takeovers of accounting firms are changing the rules for the CPA business, impacting succession plans, shifting talent strategies, and reshaping the competition, according to Robert Fligel, CEO and founder of RF Resources, one of the nation’s leading advisors.
MORE: Dustin Verity: Keep an Open Mind and Constantly Learn | Secret to Success? A Growth and Abundance Mindset | O.D. Lanier: Stepping Into Advisory | From Tax to Transformation | Early Adopters Gain an Edge in Audit | Why the Future is in Risk Advisory | Four Strategies for a Future Ready Firm Clayton Oates: One Way to Keep Clients for Life | Randy Crabtree: Follow These Three Rules to Keep Employees Happy | Erik Solbakken: Yes, You Can Work Less and Make More
SEE ALL: Podcasts and Videos here
In this exclusive interview with CPA Trendlines, Fligel, a veteran dealmaker in the vast and active New York market, explains what PE firms may not want you to know, why CPA firms are suddenly so much in demand, and the often-uncertain outlook for owners, staffers, and the profession.
For some, PE is an opportunity. For others, a threat. Fligel helps sort it all out.
Who Wants to Be Partner? Not Enough
Anybody? Anybody? Bueller? Please?
By CPA Trendlines Research
As if the general and long-term shortage of accountants isn’t bad enough, now we’re seeing a widespread reluctance to take the final step in an accounting career, the step into partnership.
MORE: OUTLOOK 2023: Compensation Gets Creative | What New Leaders Want in Ownership | Getting Partners to Accept a New Pricing Philosophy | Survey Results: Partners Rejoice on Surging Fee Growth | Headcounts Grow 5%; Pay Rates Surge at 7% Pace | Fourteen Rules for Lateral Partner Hires
Exclusively for PRO Members. Log in here or upgrade to PRO today.
This is serious. According to the 2022 Rosenberg Survey, a quarter of all partners are over the age of 60 and either near or past many mandatory retirement ages. Many have sold their equity yet continue to work just to help their own firms grapple with personnel shortages.
But nobody works forever.
Private Equity Heats Up M&A
Firms competing in the buyers’ market need to put on some polish.
By CPA Trendlines Research
The Rosenberg MAP Survey: National Study of CPA Firm Statistics
The accounting industry is seeing an upswing in mergers and acquisitions after a slowdown during the pandemic confusion.
MORE: Why Solo CPAs Need PCAs | Where Mergers Go Wrong | What Your Merger Letter of Intent Needs | 61 Things Buyers Should Explore with Sellers | Thirteen Ways to Woo Potential Firm Buyers | One Times Fees Isn’t the Only Way | Four Reasons to Fear a Merger
The reasons, according to consultants quoted in the 2022 Rosenberg Survey, are several:
- Sellers are looking for viability as partners retire.
- Sellers are looking for funding to upgrade tech and shift to CAS.
- Buyers are looking for scarce personnel.
- Buyers are looking for specialized niches.
- Buyers are looking for something to tempt private equity investment.
What kinds of tips are available for buyers and sellers?
How COVID Changes Succession Planning
Larger firms want to drive scale; smaller firms want more distribution and leverage.
By Ira Rosenbloom
Even as the pandemic rips through the world with horrific tragedy, it is also spawning some new ideas, some critical imperatives, and some unforeseen opportunities, especially in the area of CPA firm succession.
MORE: Top 10 Steps to Maximizing Profitability
We are witnessing a heightened interest in firms committing sincerely to mergers and other practice combinations, and there is now a shifting business culture that aligns better with internal practice succession than we have seen in a long while.
These shifts in succession potential are largely a function of technology, quality of life, client needs (and demands), and resources.
Let’s break it down:
2019: Using M&A to Launch Consulting
Technology drives hours down 40%; how will your firm cope?
By Terry Putney
The Rosenberg Survey: National Study of CPA Firm Statistics
The market for mergers is clearly moving toward narrow selection criteria for the acquiring side of transactions. Part of this is because of the increasing numbers of firms seeking to be acquired that are available. However, acquiring firms are also much more strategic with their objectives for an acquisition.
MORE FROM THE MAP SURVEY: 2019: More Focused Training | 2019: Expect More Alliances | 2019 Trends: Client Service Changes | 2019: Shifts in Hiring & Office Space | 2019: Firms Grapple with Change | Staff Policies Improve, But Not Mentoring
Exclusively for PRO Members. Log in here or upgrade to PRO today.
Strong organic growth means pure revenue acquisition is not enough anymore. Firms with a need for a near-term succession of a substantial portion of the partner group are finding fewer takers among the larger firms. Firms that can be acquired to help grow and launch non-traditional, non-compliance-oriented service lines are in high demand.
READ MORE →
The Importance of M&A Culture Due Diligence
A 6-point blueprint.
By Domenick J. Esposito
Over the last several years, there have been over 200 merger, acquisition, alliance and joint venture announcements by the Top 100 and other fast-growing CPA firms. Every indication is that these combinations will continue at a very rapid rate as CPA firms are:
- Facing an aging partner group that usually includes the most effective relationship and business development partners. Baby boomers have been a home run for CPA firms.
- Finding organic growth very difficult to attain with little prospect that business is going to dramatically improve in the foreseeable future.
- Realizing an inability to attract an adequate supply of high-quality talent to help perpetuate the firm.
MORE ON STRATEGIC PLANNING: Get Your Money’s Worth from Non-Billable Time | Stay Independent But Keep Looking Upward | Ineffective Partners and How to Address Them
CPA firm CEOs and other senior management are very effective at financial and operational due diligence, tracking results and holding partners accountable for hitting timely targets. On its face, an observer would tend to conclude that these 200+ combinations are very accretive to partner profitability after an integration period of 18 to 24 months.
READ MORE →
When the Inmates Are Running the Asylum
Crazy doesn’t get better by adding more crazy.
By Dom Cingoranelli
“We can’t really enforce this because we don’t want to risk having him (or her) quit.”
I can’t tell you how many times we hear something to this effect when we talk with CPAs. We hear this at small firms and we hear it at large firms. We hear it from partners, from directors, and from managers. It doesn’t matter what size firm they’re in, nor does it matter what level or position they hold.
It’s always the same line. It reminds me of the old adage, “the inmates are running the asylum.” And, it raises the question of who actually is running the firm. Who’s in charge?