How a Good Managing Partner Impacts Profitability

10 best practices.

By Marc Rosenberg
The Role of the Managing Partner

I have compared a “true” managing partner to an administrative partner. Both are important positions. Both share many common duties and expectations. But true managing partners are more valuable because they function like corporate CEOs and thus make a bigger impact on the firm’s overall performance than admin partners.

MORE: The 9 Biggest Merger Pitfalls | The Managing Partner’s Role in Mergers | Five Ways to Evaluate Partners | Manage Partners with Goal Setting | Overarching Authority That Managing Partners Must Have
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These three duties differentiate true managing partners from admin partners. True managing partners

  1. Manage partner performance and behavior
  2. Hold partners accountable
  3. Drive the firm’s growth and profitability

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The 9 Biggest Merger Pitfalls

Number 9 created by gaps between many small green plastic 9'sPlus 10 common criteria. How do they compare to your list?

By Marc Rosenberg
The Rosenberg Practice Management Library

In all industries, it’s always more difficult to find sellers than buyers. This is certainly true with accounting firms.

MORE: The Managing Partner’s Role in Mergers | How a Great Managing Partner Impacts Firm Growth | Compensation Is No Way to Manage Partners | Clarify Partner Expectations | Exceptional Managing Partners Offer Their Advice
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CPA firm merger consultants and brokers can do a great job finding buyers, but they are limited in their ability to dig up sellers. This is because the vast majority of all mergers and sales take place when buyers and sellers know each other and get together on their own without the help of a consultant.
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The Path to Partner

Man pointing at computer screen while woman works, both smilingYou need skills in general, in business development and in being a good boss.

By Marc Rosenberg
The Rosenberg Practice Management Library

The old-school way of developing staff into partners was very simple:

  • Staff are bountiful. Those with the right stuff move up; we’ll move the others out and hire a new crop to replace them.
  • It’s up to the staff to pull themselves up by their own bootstraps and make their mark. Nobody showed us how to make partner. Nobody held our hands.

MORE: Making Partner: What Managers Need to Know | The 17 Rules for Making Partner at a CPA Firm | Who Shouldn’t Be a Partner? | Nine Reasons People Are Promoted to Partner
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  • It’s up to the staff to tell us that they want to be partners. Unless and until they show us this ambition, we won’t talk to them about becoming a partner.
  • Bringing in business can’t be taught. You’re either born with it or you’re not.
  • And while we are on the subject of business development, we all know from experience that marketing must be done nights and weekends. Clients are too busy during the day. And we need the days to get our billable hours in. So a partner must commit to working long hours, including nights and weekends, and be willing to sacrifice his or her personal life for the firm.

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The Managing Partner’s Role in Mergers

17 key factors and 18 common turnoffs. BONUS: An 8-point history of CPA firm mergers.

By Marc Rosenberg
The Role of the Managing Partner

We have discussed how the managing partner impacts organic growth activities. But a major growth strategy was not addressed: mergers and acquisitions, or more precisely, how managing partners impact M&A at their firms.

MORE: 10 Ways to Hold Partners Accountable | Five Ways to Evaluate Partners | Manage Partners with Goal Setting | Overarching Authority That Managing Partners Must Have
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When managing partners are asked what their revenue growth is, they invariably respond something like this: “We grew 12 percent last year, 8 percent organically and 4 percent through mergers.” It’s almost like the 4 percent from mergers didn’t count. But this is changing.
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Making Partner: What Managers Need to Know

Businessman leaning on railBeing a partner includes 16 specific duties, whether you’re equity or non-equity.

By Marc Rosenberg
The Rosenberg Practice Management Library

When managers become new partners, they face numerous changes. Those include some things they’re entitled to … and not.

The Realities

You’re an owner. As such, you get paid based on the firm’s earnings, not as an employee.

MORE: The 17 Rules for Making Partner at a CPA Firm | Who Shouldn’t Be a Partner? | Nine Reasons People Are Promoted to Partner | How to Make Partner
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You pay for your ownership. New owners in any business must pay money to acquire their ownership. At CPA firms, this is called a new partner buy-in. Because CPA firms have a substantial street value, it’s reasonable that new partners should be required to purchase their interest in the firm.
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How a Great Managing Partner Impacts Firm Growth

Eight ways that firms benefit.

By Marc Rosenberg
The Rosenberg Practice Management Library

There are two cases for heavy managing partner oversight in practice development.

First case. CPA firms are very top-line-oriented businesses. Expenses are largely fixed because most are for personnel compensation and benefits, so opportunities for increasing profits from cost-cutting are greatly limited. As a result, increases to the revenue or top line often fall directly to the bottom line. It’s easy to see why, far and away, increasing revenue is the most effective way to increase profitability. Because the managing partner is (or should be) responsible for the firm’s profits, it makes total sense for the managing partner to play a major role in the firm’s growth.

MORE: 10 Ways to Hold Partners Accountable | Five Ways to Evaluate Partners | Manage Partners with Goal Setting | Overarching Authority That Managing Partners Must Have | Herding Cats: Advice for Managing Partners
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Second case. If a firm’s staff is its most important asset (or at least tied with clients), then revenue growth is the firm’s life-giving force. Without revenue increases, firms become stagnant and die a slow death. Therefore, revenue growth requires heavy involvement by the managing partner.
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The 17 Rules for Making Partner at a CPA Firm

Checklist: It’s a big job, after all.

By Marc Rosenberg
The Rosenberg Practice Management Library

We’ve all heard the names given to various generations of people over the past century. The Lost Generation. The Greatest (WWII) Generation. The Silent Generation. Baby Boomers. Gen X. Millennials. Gen Z. Though I don’t know of any studies on this, I’m quite sure that every generation of CPA firm ownership has complained – bitterly – about the younger generation.

MORE: Who Shouldn’t Be a Partner? | Nine Reasons People Are Promoted to Partner | How to Make Partner?
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Baby Boomers and Gen Xers love to complain that today’s staff don’t want to be partners. They cite this as a major reason why it’s so difficult to bring in new partners.
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Who Shouldn’t Be a Partner?

Businessman with hand extended in "no" gestureFive red flags.

By Marc Rosenberg
The Rosenberg Practice Management Library

There are two sides to every discussion. I may have made it seem as if you’d have to be a fool not to want to be a partner. But being a partner isn’t for everybody. The reasons listed below exclude issues not germane to this discussion, such as a desire to change careers, opportunities to join one’s family business or boredom with accounting.

MORE: Nine Reasons People Are Promoted to Partner | How to Make Partner?
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Long hours. At most firms, when the staff leave, the partners are still working. Some feel it sends a negative message to the staff because it implies that there is an expectation for partners to work long hours and therefore make it difficult to enjoy a healthy work-life balance. Rosenberg MAP survey metrics corroborate this: Partners average around 2,410 total work hours but the staff average is 2,280, a difference of 130 overtime hours.
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The Managing Partner’s Role in Managing Staff

Man looking at 5 keys14 keys. Yes, they’re all important.

By Marc Rosenberg
The Role of the Managing Partner

We have shared the most important parts of overall CPA firm management and the main duties of the managing partner in particular.

MORE: 10 Ways to Hold Partners Accountable | Five Ways to Evaluate Partners | Manage Partners with Goal Setting | Overarching Authority That Managing Partners Must Have | Herding Cats: Advice for Managing Partners
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We presented a job description for a managing partner. Depending on the day of the week and the makeup of the group discussing this job description, several items would be finalists for the most important duty on the list. Few would argue if the winner of that competition were managing staff. Here is the managing partner job description item pertaining to staff:
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