David Schools’ Post

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! 😅🫠🤣

Accounting Firms Ownership Structure and related funding opportunities (or lack thereof) - Wall Street Journal article April 5th, 2024 #accountingadvisory #auditing #eyus #kpmgus #pwcus #deloitteus #accountingprofessional #cpa #cpas #capitalmarkets Article summary (Microsoft BING AI system): 1. Ownership Re-evaluation: Large accounting firms are considering changes to their ownership structures due to challenges like capital needs and skilled worker recruitment. Some are contemplating private-equity investments or public listings of business lines. 2. Structural Changes: Firms like Grant Thornton and BDO are exploring new models. Grant Thornton’s U.S. unit plans to sell a stake to a private-equity firm, while BDO’s U.S. arm has set up an employee stock ownership plan (ESOP) to give employees a direct stake in the firm. 3. Regulatory Concerns: There are concerns from regulators like the SEC about private-equity investments in accounting firms, due to potential conflicts of interest that could affect auditor objectivity. 4. Barriers to Change: Traditional ownership models, CPA licensing laws, and SEC rules present challenges to structural changes. These include limitations on raising equity and restrictions on consulting services for audit clients. The article delves into the reasons behind these potential changes and the implications for the future of the accounting profession. #grantthorntonus #bdous

🎯 Looking for more than just number crunching from your accounting firm? Discover how accounting firms are transforming their traditional roles into strategic partnerships for businesses across industries.⁠ ⁠ Click the link below to read the full article!⁠ https://lnkd.in/eGVt9aRD ⁠ #CRIcpa #AccountingFirms #BusinessPartnerships #Innovation #SuccessStories #EmpowerYourBusiness⁠

Is your accounting firm growing slower than you expected? The most successful firms aren't just working harder—they're taking a fundamentally different approach to growth. In our latest analysis, we reveal strategies that transformed firms just like yours. Watch now to discover the systematic approach that forward-thinking accounting firms are using to accelerate their growth. https://lnkd.in/gcPXhMPN . . . #accounting #firm #accountantsandaccounting #accountingandaccountants #accountingandfinanace #accountingcoach #accountingfirm #accountingfirms #accountinginsights #accountinglife #accountingpractice

Is your accounting firm growing slower than you expected? The most successful firms aren't just working harder—they're taking a fundamentally different approach to growth. In our latest analysis, we reveal strategies that transformed firms just like yours. Watch now to discover the systematic approach that forward-thinking accounting firms are using to accelerate their growth. https://lnkd.in/gnv7Gwdd . . . #accounting #firm #accountantsandaccounting #accountingandaccountants #accountingandfinanace #accountingcoach #accountingfirm #accountingfirms #accountinginsights #accountinglife #accountingpractice

I often talk about the concept of a “new firm,” but what does that really mean? It’s not about tweaking a few processes here or there. It’s an overhaul that brings you closer to your clients, harnesses tech and flips the old-school hourly model on its head. Through the end of the year, I’m going to be sharing what I think is imperative to a new firm, but I want to know what you think. To kick it off, share below what you think is necessary to be considered a new firm. #CPA #CPAfirm #accountingandaccoutants #accounting #accountingfirm #taxtwitter #newfirm #radicalcpa

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.

Yes to audit and consulting split Not sure about the 1,000 down to 100. That said, review the ownership structure for partners and that might change everything. As has been reported elsewhere, once the Big4 are in they rarely leave, and they begin to complete transactional work at inflated costs. Further, given these opportunities, there is little to no incentive to advocate and drive major cost out across whole of government.

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

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!