How’s Business? Business Trends for Area Accounting Firms
usiness trends for area accounting firms are generally strong and the outlook is brightening, according to our proprietary RF Resources survey of Metro New York CPAs.
Some 68% of Metro NY CPAs are “fairly confident” or “highly confident” about the business outlook for their own firms over the next 12 months. Only 11% feel the same way about the national economy. That speaks, I think, to both the strength of the CPA business in Metro NY in particular and to the relative strength of the Metro NY economy in general. It also highlights the serious concerns CPAs have about the national economy, seemingly regardless of who wins the presidency.
In other findings, the pace of merger activity and deal flow among Metro NY CPA firms is accelerating dramatically. Based on my analysis, 35% of Metro NY CPA firms will see a change of ownership in the next five years.
I see five key factors driving deal flow. Based on RF Resources market research, those factors are:
- CPAs seeking a better quality of life (73.4% of CPAs cite this as an issue that they are giving increased attention or consideration to this year. Demographics and the aging baby boom explain a lot of this.)
- The strains of keeping up with technology (72.6% cite this with heightened concern. It’s getting more expensive and time-consuming for firms to adopt new technologies, especially at today’s pace of change and the advent of the Cloud.)
- No internal succession plan (52.9% say they are increasingly worried that they have no one within their own firms to take over once they decide to retire. The economic dislocations of the last few years have thrown a wrench into many, many retirement plans.)
- More firms are seeking to make an acquisition (37.4% of CPA says they’re looking to buy another practice or firm. This is both putting (a) increased pressure on other firms to sell and (b) pressure on other could-be buyers to act with even greater urgency.)
- More firms are seeking partners, or partner groups, with a book of business. (36.6% of CPAs say they are pursuing this strategy increasingly this year. It’s another factor driving the M&A trend.)
If you’d like to discuss this or any other issues related to your practice or career, please don’t hesitate to contact me. My direct line is (212) 490-9700 or email me at firstname.lastname@example.org. Absolute confidentiality always assured. - Robert Fligel, CPA
P.S.: If you haven’t already seen it, Crain’s New York has done a nice special report on the accounting business in our area. I’m happy and honored to be quoted so prominently. View or download a PDF of “Gobbling Up the Small Fry”.