Tech, Capital Will Drive Accounting Profession Growth

Business hand holding hot chart in crystal ball

How much? Faster than the rest of the economy.

By Terry Putney
The Rosenberg MAP Survey

EDITOR’S NOTE: Every year, the Rosenberg MAP Survey asks the industry’s top consultants to share their observations from CPA firms across the country. How do you think the next 12 months will unfold? Also, how would you assess the last 12 months?

The private equity model is still unproven in the minds of many CPA firm partners as there are no examples of a secondary market for the investors of CPA firms. Private equity investors in other professional disciplines like veterinary, dental and engineering have experienced success with attracting secondary and tertiary investors.

MORE: New Energy Comes from New Ways of Doing Business | Outsourcing, Remote Work Will Help Firms Grow Capacity, Revenue | Private Equity Leading to Corporate-style CPA Firms | PE, Consolidations to Keep Impacting Accounting Profession | A 40-Hour Workweek Is Feasible | Five Ways Staff Shortages Are Changing Firms Forever | Soft Skills Are Front and Center
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Until we see that happen in accounting, there will remain some skepticism about the viability of this business model. It is not my skepticism. But accounting firms that are considering private equity are expressing that as one of their concerns.
READ MORE →

OUTLOOK 2023: Private Equity Pumps Up Paychecks

Private equity is affecting even non-PE deals.

By Terry Putney
The Rosenberg MAP Survey: National Study of CPA Firm Statistics

The profession as a whole has a significant problem attracting college graduates. The 150-hour requirement coupled with non-competitive compensation compared to finance degrees, as an example, is causing enrollment in accounting programs to drop and graduates to choose alternative careers.

MORE: OUTLOOK 2023: Tech Automation Takes Hold | IRS Hires Will Add Pressures | Look Who’s Making Money Now | Capacity Strategies Drive Change | Top Five Trends | Compensation Gets Creative | The Office Is Over | Accounting Firms Face Up to Private Equity
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Until the profession addresses these issues, firms are going to find it hard to recruit enough talent. We predict the use of alternative sources of talent, such as offshore, will continue to grow in response to this challenge.
READ MORE →

What New Leaders Want in Ownership

Is your firm ready to pass the baton?

By Terrence E. Putney

Buying into a firm as a new owner involves great opportunity, but also significant risk. It is reasonable for ownership candidates to evaluate the potential for professional and financial rewards before taking such a step. Therefore, firms must be willing to honestly assess the potential risks and benefits for candidates as they seek to attract new partner-owners who can contribute meaningfully to the firm’s continued success.

MORE: What’s the Why? | Learn How to Let Go and Let Someone Else Step Up | How to Close the Generation Gap | How to Encourage Firm Ownership | Each Generation Must Change
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Most of the firms we work with on succession planning start off with a strong preference to remain independent. They want to avoid having to sell or merge in order to address the need to pay off and replace retiring owners. The common reasons we hear cited are:
READ MORE →

Private Equity at the Gates

The pandemic has accelerated our progress toward the future that was already in the offing.

By Terry Putney

The pandemic is changing where firms work. And it’s a huge issue.

MORE: 12 Shifts to Ensure Firm Success | How to Reinvent the Firm for the COVID Age | Why It’s Time for an Acquisition | Three Ways the Accounting Profession Has Changed | Ramping Up for the Year Ahead
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Office space is being downsized dramatically. Long-term office leases that must be assumed by an acquiring firm are becoming a deal killer in many M&A deals. We are seeing a significant increase in the number of firms that are going almost completely virtual. READ MORE →

COVID-19 Shakes Up M&A Activity

Arrow rising above ever larger blocks in businessman's hand, indicating growthWant to grow? Make sure your tech stack can keep up.

By Terry Putney

We are in a fluid environment as firms adapt and learn more about what to expect. I think earlier this year there was hope that we would emerge from this economic environment by the end of 2020. It looks now like this could definitely have an impact through 2021.

MORE: 2021: You’ll Never See ‘Normal’ Again | SURVEY: We Adapted to Remote Work … Now What? | SURVEY: 2020’s Disruptions Are Only the Beginning | COVID Brought Us More and Better Client Communication
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

It is a mixed bag so far for M&A. Some firms have pulled back and I suspect that is because, although this may not make sense logically, it may be hard to internally sell buying a firm and hiring more staff when the firm is laying off people and cutting back on partner draws. However, we are also seeing very motivated buyers and sellers because of the opportunities that appear to be available. One thing that can’t be avoided is the difficulty of negotiating and evaluating targets when you can’t meet face to face regularly.
READ MORE →

2020 Outlook: Upstream Mergers

Look forward 10 years and be realistic about succession.

By Terry Putney

There appears to be an emerging mindset among buyers that because of the possible demise of compliance services like tax return preparation, smaller firms with significant 1040 practices should be avoided. Right now, there is no evidence the demise of the 1040 business is imminent for other than the simplest returns.

MORE: 2020 Outlook: Staffing Gets Creative

READ MORE →

2019: Using M&A to Launch Consulting

Putney
Putney

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
GoProCPA.comExclusively 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 →