“many buy/sell agreements just aren’t financially feasible.”
by tamera loerzel
rosenberg map survey
a major trend in 2016 that continued throughout 2017 is that there are too many trends for firm leaders to focus on!
this often leaves many firm leaders overwhelmed and unsure where to spend their time and resources. here are my top three:
more from the map survey: firms struggle to retain clients, key players | offshoring on the rise | tech advances will lead to dichotomy | be a consultant or be left behind
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1. while attracting, retaining and developing top talent continues to be a top issue, firms that are winning the people race have worked to ensure a unified partner group.
firm leaders are working on governance that empowers their managing partners, service line leaders and partners, and finding ways to empower their people to own more sooner in their firms. creating this kind of unified approach and true empowerment creates a solid foundation for implementing new or enhanced people programs, such as unlimited or open pto programs, dress for your day, true anytime/anywhere work environments, workflow and efficiency programs and more.
every year, the authors of the rosenberg map survey ask the industry’s top consultants to share their observations of what they are seeing at cpa firms. specifically, they are asked the following questions:
- what kind of year was 2016? what were the major trends you observed? what were the issues you saw firms struggling with the most?
- 2017 is half over. based on your experiences this year, what are you seeing? what are the major trends? what are firms struggling with and what are they working on as the year progresses?
2. technology is fast moving to surpass the people challenges. technology has to be on all firm leaders’ radars as a top priority. process improvement tools and apps, artificial intelligence, blockchain, data analytics and more will change the way firms deploy and develop talent as well as the kind of talent firms should be hiring. and ensuring firms have the right-level it director who is strategic and can lead the firm where it needs to be – now and in the future – is essential for firms’ long-term success.
3. partner retirements continue at a fast clip even though we continue to see a trend of partners extending their retirement dates. this can hamper future leaders’ views about their opportunity for future ownership and is compounded by partners resisting letting go of
- client relationships to ensure a strong transition,
- control to allow change that needs to occur now for firms to remain competitive and
- outdated buy/sell agreements that don’t work anymore.
many small to midsize firms are redefining their buy/sell and operating agreements to ensure they are financially feasible for new partners. modeling the buyout of projected retiring partners is a must as many buy/sell agreements just aren’t financially feasible. the model has to make sense for both parties, but ultimately, if the partners buying in can’t afford it, both lose. because of these complicated issues, merger activity continues to be high, too.