Compensation

Who Will Do What by When?

By

six people around work table

How to implement your firm’s strategic plan.

By Matt Rampe

After laying out major strategic priorities for how the firm can move toward its vision, the natural next step is to refine and define those plans. This is the beginning of the Implement stage, perhaps the most important stage of all.

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FORTUNA ACCOUNTING CHECK-IN

Sal had been at Fortuna Accounting since the beginning, and Bill knew he wasn’t great at accountability. It wasn’t that Sal didn’t want things to be better; it just seemed like he would do a lot of talking without a lot of acting on the things expected of him. With all the work and hopes that had been invested into their strategic planning so far, Bill wanted to make sure it didn’t all go to waste in the execution phase.

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What Goes Into M&A Valuations

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Overhead view of people solving a large jigsaw puzzle

Plus vetting candidates.

By Domenick J. Esposito
8 Steps to Great

Let’s take a deep dive into what you need to know about merger combinations, which are as much about the addition of talent as they are about the addition of clients.

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CPA Firm Valuations

The two typical valuation components in most merger combinations are capital and goodwill.

  • Capital is straightforward: It is a firm’s accrual-based capital adjusted for the fair market value of fixed assets, work in process and receivable reserves. It is paid as cash or a note (in some cases the note bears interest), over a relatively short term.

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Four Downsides of a Production Orientation

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Hand moving triangle along beam to indicate balance between price and value

Where to focus instead.

By August Aquila
MAX: Maximize Productivity, Profitability and Client Retention

An emphasis on production (billable hours) can have negative consequences for an accounting firm. An emphasis on billable hours causes professionals to focus on internal measurements, i.e., the number of hours charged to a client, and not external measurements such as client satisfaction.

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They also emphasize the technical aspect of accounting work and keep professionals from developing a marketing mindset. Let’s look at the four negative consequences of a production orientation.
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The Talent War Has a Side Nobody Is Talking About

By

woman speaking and giving direction to subordinate

BONUS: A career ladder below partner.

By Hitendra Patil

Around the 150th conversation I had with firm owners about staffing – I counted for a while before I stopped – and a pattern became obvious. The firms struggling most with retention were almost always struggling with the same two things: no visible career path for anyone below the partner track, and no honest answer to the question of where the firm was going.

PE-backed firms have ready answers to both.

  • Career path: You will grow into a larger organization with more titles, more specialization and more upward movement.
  • Firm direction: toward scale, through acquisitions, toward an eventual liquidity event.

These are not always the right answers for every person. But they are clear answers. Clarity has real pull when someone is sitting across the table weighing their options.

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Shape Partner Behavior through Compensation

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manager holding up carrots in front of employees

Does your firm have the right mix?

By Domenick J. Esposito
8 Steps to Great

Visualize your partner group fitting into a bell curve.

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In Quartile #1, you have the stallions – the very high performers who produce outstanding contributions to the firm year in and year out. These equity partners want to win and know how to do it.
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How AI Upends CPA Firm Pay Structures: Bloomberg Talks with Piscopo

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Big 4 Transparency founder Dominic Piscopo makes featured appearance on Bloomberg.

By CPA Trendlines

Accounting firms are being forced to rebalance compensation structures—shifting pay and incentives away from entry-level staff and toward managers and reviewers—as artificial intelligence reshapes how work gets done, according to Dominic Piscopo, host of Big 4 Transparency on the CPA Trendlines Streaming Network.

MORE Dominic Piscopo and Big 4 Transparency | MORE CPA Trendlines Streaming Network

Piscopo’s full discussion on AI, compensation trends, and the future of accounting talent is available on Bloomberg Tax’s Talking Tax podcast. His ongoing analysis of salary data and workforce trends is featured on the Big 4 Transparency show, streaming on CPA Trendlines.

“Having transparency in those models and being willing to talk about it with people —not just have this very kind of cold process where a number is thrown out—can make all the difference, even if the number is exactly the same,” Piscopo tells Bloomberg Tax reporter Jorja Siemons.

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The Six Types of Due Diligence You Need before Merging

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Don’t concentrate on some and breeze through others.

By R. Peter Fontaine
NewGate Law

My approach in writing this post is to give you a comprehensive list of due diligence items for your consideration, and to let you select the reviews you wish to perform. The ultimate decision rests with you.

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The scope of due diligence will differ depending on the transaction, and should be appropriately tailored. However, your Letter of Intent combined with the six areas outlined below result in a fairly comprehensive list of due diligence procedures that should serve the needs of most CPA mergers.
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Four Advisory Lessons Learned

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woman and man meeting in office; chart on his laptop screen

And four case studies for illustration.

By Jackie Meyer
The Balanced Millionaire: Advisor Edition

You’ve already heard the story of one of my first high-net-worth clients – an executive preparing their own tax return, making costly errors and ultimately turning to me for help. Let’s revisit this example with a deeper dive into the transformation and outcomes.

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Case Study 1: From $150,000 in Tax Savings to 1,400 Percent ROI

The Situation: This client was an executive with a complex financial situation, including private equity investments that generated dozens of K-1s. When I initially reviewed his self-prepared return, I found that he had misclassified a capital gain sale as royalty income, which led to an overstatement of income by hundreds of thousands of dollars. In 2012, I charged him an hourly rate of $150 to amend the return and correct the mistake. This simple fix saved him $150,000 in taxes.
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Why Addressing Ineffective Partners Isn’t Optional

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Three office workers glaring at camera

How to arrange a “soft landing.”

By Domenick J. Esposito
8 Steps to Great

Most accounting, tax and advisory CPA firm professionals who have demonstrated that they can help perpetuate an organization become partners between the ages of 35 and 42. In many cases, these same professionals retire from their firms as they approach the age of 60, 65 and 70.

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Many emotional and physical changes happen to us humans over the course of 25, 30 or 35 years. Sometimes for the good and sometimes for the bad, our personal lives, energy levels and productivity at the age of 35 usually are different than our personal lives, energy levels and productivity at the age of 65.
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How to Merge Two Solo Accountants

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two men standing and shaking hands

A list of 21 issues to consider.

By Marc Rosenberg
CPA Firm Mergers: Your Complete Guide

When considering a merger of sole practitioners, there are numerous critical issues to negotiate. Twenty-one, in fact.

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1. Method/system for splitting the profits. Keep in mind that if you devise a system that essentially revolves around making each solo a profit center, as if they still had their own firms, it will tend to discourage the two of you working together as one firm.
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