Alex Fursov, CPA, CMA, CIA’s Post

The Wall Street Journal (aka, "The Wall," per Michael Scott) has shifted their coverage of the talent crisis in accounting towards what I would call the, "partnership crisis." They highlight three major transactions (2 consummated, 1 failed) among Top 10 firms, Grant Thornton LLP (US), BDO & EY. Grant Thornton: Biggest PE deal to date (pending regulatory approval) with the traditional PE growth playbook. Reasons identified why Big 4 wouldn't pursue this: business structure is too complex and independence concerns. BDO: Created an ESOP and converted from a partnership to a corporation. Partners gave up their pensions and sold their shares to the Trust, which was funded by Apollo Global Management. Some partners took a pay cut. Reasons why other firms wouldn't follow suit: to appease partners who don't want to give up their pension or share ownership with those below partner level. EY: Attempted to split audit & advisory businesses en route to an IPO. Reason why it didn't work: audit partners rejected the deal because the majority of the lucrative tax practice would have folded into the advisory business. It's hard to not draw the conclusion that audit practices are a substantial barrier to firms changing their ownership and operational structures. Adding to this is a group of partners (not just audit partners) who feel like they're getting the raw end of the deal. And so, I arrive at my two hot takes... One. Audit is only one thing that CPAs do, yet it drives the standards that all CPA firms are held to, which creates ridiculous rules and red tape for firms and licensees that don't do attest work. Most firms would probably just divest of their audit practice if it weren't for the votes of audit partners and the revenue generating opportunities to other practice areas afforded by the audit client relationship. Two. The old, traditional partnership model is dying, and the only people who are sad about that reality are partners. We're on the precipice of a renaissance era in public accounting, not as a result of standing on the shoulders of giants but through the power that David gave to the Dark Horses, the underdogs, when he toppled Goliath.

Many accounting firms are looking to modernize their ownership structures and operations, but traditional audit practices might be unintentionally holding them back. This article from Chase Birky, CPA is really useful for CPAs!

From private-equity ownership to IPO plans, some of the world’s biggest professional-services providers are weighing overhauls to evolve. Large accounting firms are re-evaluating their ownership structures as they face growing capital needs and struggle to recruit enough skilled workers, with some considering private-equity backing or the public listing of a business line. The combination of partner retirements and funding extensive technology investments while spending to attract and retain workers during an accountant shortage has strained some firms, spurring them to explore whether the traditional partnership structure still works best. Global accounting and consulting networks—including Deloitte, Ernst & Young, PwC, KPMG, Grant Thornton LLP (US) and BDO—have explored various tactics to address these challenges. Mark Maurer breaks it all down, including changes that three firms recently made—or tried to make. Should large accounting firms change their ownership structure? Join the conversation below, or in the comments section.

These are a few of the headlines I read at the dinner table last night to our kids (9- 7- and 4-years old): - “Accounting Firms Forvis and Mazars Finalize U.S. Acquisition, New Global Network” – WSJ - “Forvis Mazars Shakes up Professional Services Industry with New $5 Billion Global Network” – Financial Times - “Forvis Seizes on Tax, Consulting Demand in Global Mazars Deal” – Bloomberg 9 y/o: “Mom, you’re not allowed to have a phone at the dinner table.” Me: “You’re right, but today was a big day for Daddy! I’m going to keep reading...” - “These Accounting Firms Took a Different Approach to Shaking Up Their Structure” – CFO Journal - “Forvis, Mazars Complete Combination Creating $5B Accounting Giant” – Business Journals - “Forvis, Mazars Join Forces to Become Top 10 Global Firm” – NJBiz 9 y/o: “But Mom, you’re breaking the rules!” - Typical first born! 4 y/o: “Wait, Mazars… that’s Daddy’s company!” - Like a lightning strike! 7 y/o: “Yeah, Daddy’s famous, don’t you know!?!” - Delivered with total know-it-all nonchalance! Yesterday two leading professional services firms, Mazars, an international conglomerate in 100+ countries (where Michael Fried has been a partner since 2016) and FORVIS, a top-ranked U.S. firm, officially merged to launch Forvis Mazars US (just rolls off the tongue, doesnt it?! 😉). According to IAB World Network Rankings, with combined revenues of $5 billion, this makes Forvis Mazars the largest new entrant to the top 10 global network in over two decades. There have been MANY late-night phone calls, countless pre-dawn Zooms, and regular cross-country and worldwide flights in preparation for this day. Managing teams, transitions, and turnover - deconstructing, restructuring, and building…the list of balls being juggled over the last year has been truly endless! But, proud doesn’t scratch the surface re: the awe I have for this hubby of mine who is the definition of grace under fire. He’s the duck feet churning underwater while nothing but calm, cool, and collected up top. All this excitement and transition hasn’t kept him from family dinners (where be usually abides by the no phone policy 😜), from coaching the girls' swim team, or from kicking his own butt during 5 AM workouts. How he does it all, I’ll never fully understand. But his commitment to EFFORT is a good starting point. In all areas of life; our marriage, our kids, our travels (he plans the trips and packs the kids), his work, his fitness, his leadership, his commitment to learning - his EFFORT is always 100%. He’s all in, all the time. He puts people and relationships first and loves building, coaching and growing – whether that’s building work teams, coaching swim relays or growing global businesses!!! So congratulations to Michael Fried for this monumental work achievement. I love you. I am proud of you. I am inspired by you. And I know that with your work ethic, one day you will be able to beat me in a three-mile run! 😅🫠🤣

There is an unprecedented opportunity in the accounting industry, and some of the largest private equity firms have been on a tear sinking their teeth into it. Here are just a few reasons why: 1. According to data published by the AICPA, "𝟳𝟱% 𝗼𝗳 𝗹𝗶𝗰𝗲𝗻𝘀𝗲𝗱 𝗖𝗣𝗔𝘀 𝘄𝗶𝗹𝗹 𝗯𝗲 𝗿𝗲𝘁𝗶𝗿𝗶𝗻𝗴 𝗼𝘃𝗲𝗿 𝘁𝗵𝗲 𝗻𝗲𝘅𝘁 𝟭𝟱 𝘆𝗲𝗮𝗿𝘀", and there are not nearly enough people pursuing the profession to backfill. The demand characteristics are great.     2.  The acronym of the last few years - "𝗔.𝗜" - is not expected to destroy the profession, but instead artificial intelligence will create more leverage points, further increasing effectiveness and efficiency leading to higher margins. In short, 𝗯𝗼𝘁𝘁𝗼𝗺 𝗹𝗶𝗻𝗲 𝗴𝗿𝗼𝘄𝘁𝗵! 3. High-margin, healthy businesses are the linchpins of the private sector, yet their potential magnifies when transitioned to public markets. Private Equity firms, with their laser focus on generating shareholder value, are eyeing accounting firms as prime candidates for this transition. The proposition? Ditch the traditional partnership models for public listings - 𝗵𝗶𝗴𝗵𝗲𝗿 𝗺𝘂𝗹𝘁𝗶𝗽𝗹𝗲𝘀, 𝗮𝗻𝗱 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗼𝗽𝘁𝗶𝗼𝗻𝘀.        The opportunity in the industry huge, which is exactly why Alpine Mar CPAs & Advisors is on the forefront of redefining it. If you're considering a career in accounting, I can tell you first hand, it's A LOT sexier than you once otherwise might have thought. The industry just needs a new mascot.... We're working on it! Check out last week's article from the The Wall Street Journal 👇🏼 https://lnkd.in/euQvdm_f

Private equity firms are in talks to buy 50% of public accounting firms - but they are not the only ones. Here’s whats happening: When Baker Tilly was acquired for $1bn early this year it shook the accounting world - but the reality is the highly fragmented industry was long overdue a shakeup. Now more and more investors are attracted to the high defensibility licensed public accounting firms offer, especially against a backdrop of increasingly small numbers of accountants being trained. But with CBIZ acquiring Marcum, Private Equity also has to compete with strategic buyers who are looking to consolidate a position in the market. PE backed Citrin Cooperman has also been particularly aggressive, acquiring 17 smaller firms as part of a roll up strategy. Despite margins being under pressure, the new players are confident that with better use of technology they can avoid the inefficient bloat that has plagued the big 4. Jeff Ferro, CEO of Baker Tilly, told Accounting Today that their private equity sponsor was providing them with additional capital to invest in technology initiatives - and this was echoed by Michelle Tompson, CEO of PE backed Cherry Bekaert How this ends is anyone’s guess - but one thing is for certain, the industry is long overdue a shakeup and accountants need to prepare themselves for substantial change in the coming years.

Moran Chartered Accountants, one of Melbourne’s leading accounting firms, recently made the decision to switch back to Access Accountants for its cloud-based capabilities. 🙌 Read about this here 👉 https://ow.ly/l25c50Sf0Oi #WeAreAccess #FreedomToDoMore #Accountingandaccountants #CloudBasedAccounting #AccountingFirm #BusinessAdvisory #CloudAccounting #AccountingSoftware

The The Wall Street Journal's recent focus on accounting firm ownership shakeups highlights a growing "partnership crisis." Let's break it down: Grant Thornton LLP (US) + Private Equity: A major play for growth, but likely off-limits for the Big 4 due to complexity and independence woes. BDO's ESOP Gamble: Partners ditch pensions for shared ownership. Too radical for most firms? EY's awkward breakup: Imagine getting offered a giant pile of cash...and turning it down! Those bossy audit folks ruined the party. 🙄 The Problem: Audit keeps firms stuck in old rules, even when the rest of accounting is ready for a makeover. My predictions: -> Audit: Accounting's Awkward Third Wheel Firms secretly wish they could swipe left on audit but can't resist those sweet consulting leads. -> Rise of the Accounting Rebels: The traditional partnership model is ripe for disruption. This isn't the fall of giants but a rise of underdogs and new ways of thinking. What do YOU think? Is accounting ready for a change? Agree? Disagree? Let's discuss the future of accounting! #accountants #makeover #linkedin https://lnkd.in/ewQ-FBKJ

The need for more qualified accountants is real and shifting the way firms operate. Large accounting firms are re-evaluating their ownership structures as they face growing capital needs and struggle to recruit enough skilled workers, with some considering private-equity backing or the public listing of a business line. The combination of partner retirements and funding extensive technology investments while spending to attract and retain workers during an accountant shortage has strained some firms, spurring them to explore whether the traditional partnership structure still works best

These Accounting Firms Took a Different Approach to Shaking Up Their Structure https://lnkd.in/eQmNcCFe