Analysis and Commentary by Robert Fligel, CPA
NY Metro Area Public Accounting Trends and Observations
Dear Friends and Colleagues,
I hope everyone is having a good start to the new year with a little less stress and pressure compared to the multitude of deadlines to come as tax and year end season kicks in.
Public accounting is truly a year-around business, as it should be. You are your client's first-string quarterback and closest advisor. And that's a very good thing!
From where I sit, there is a buzz of activity as all firms are gearing up and planning for taxes, audits, reviews, compilations and special projects. Below are some of the activities I have been involved with recently which I believe are indicative of current trends in the profession.
- Met with a lateral partner placement who recently started at a $15 million firm. This was a good example of a strong local firm that doesn't want (or need) to merge, but does need more partner talent to achieve its internal succession goals.
- Spoke with the managing partner of a $3 million firm whose lease is expiring and needs more space. They have had strong organic growth and a recent merge in and feel optimistic about long-term prospects, but do have their eyes carefully on the five- to 10-year "next steps." I know of several other firms who are seeking additional space, which is a good sign.
- Attended the recent NYSSCPA Medium and Large Firm Committee meeting, where Marc Rosenberg, a noted national consultant, spoke about firm metrics and profitability. Many good points and action ideas to increase profitability were at the forefront. The talent shortage and partner accountability were close behind. It was also clear that equity partnership and related retirement/deferred compensation is more highly valued than ever and certainly must be earned. There also seems to be the beginning of a trend for non-equity partners to receive a modified version of a retirement benefit.
- Have been in the process of facilitating M&A discussions between two large firms. This is a first-stage meeting; a situation where neither firm has to do anything but ... there happens to be some interesting synergies. Regardless of outcome, as they really didn't now each other before this, it's a good thing to explore and get to know a respected peer.
- Attended Craig Morris's Practice Continuity Committee meeting in Woodbury and enjoyed a presentation from a retirement consultant and a panel of current and soon to be retiring partners. The importance of personal planning well in advance for retirement, client transition, and not waiting too long to retire, really hit home. There are no do-overs when it comes to life and death, so the fewer "coulda, woulda's," the better.
- Had a meeting with a small and very successful firm in Long Island that is seeking a merge in or possibly a lateral merger or junior partner. I don't meet that many young, single-partner firms, so it was refreshing to hear how this 47-year-old owner wanted to build their business.
- Met with a large firm that will be commencing a search for a new partner in charge of tax. This is the result of the firm's continued growth and acknowledgment that it has outgrown the incumbent. True to its culture of "taking care of people," that person will continue at the firm, just in a different role. More and more I see firms reexamining their leadership ranks as organic growth is still relatively slow, so maximizing efficiencies and opportunities is a top priority.
If you are curious about how you or your firm matches up to others, what's the latest with CPA mergers, partner compensation trends and data, how to deal with the talent shortage, and just about anything connected to the public accounting community, please don't hesitate to contact me. My direct line is 212-490-7900, or you can email me at rfligel@rf-resources.com. Absolute confidentiality is always assured.
Wishing you a great 2015!
- Robert Fligel, CPA
P.S. Let me share an upcoming event: http://accountantsclubofamerica.org/events/barry-c-melacon/. I have always found Barry to be a fantastic speaker and one who can provide a comprehensive look at the most pressing industry trends and issues. If you are interested, please contact me, as I am glad to bring guests.
