technology drives hours down 40%; how will your firm cope?
by terry putney
the rosenberg survey: national study of cpa firm statistics
the market for mergers is clearly moving toward narrow selection criteria for the acquiring side of transactions. part of this is because of the increasing numbers of firms seeking to be acquired that are available. however, acquiring firms are also much more strategic with their objectives for an acquisition.
more from the map survey: 2019: more focused training | 2019: expect more alliances | 2019 trends: client service changes | 2019: shifts in hiring & office space | 2019: firms grapple with change | staff policies improve, but not mentoring
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strong organic growth means pure revenue acquisition is not enough anymore. firms with a need for a near-term succession of a substantial portion of the partner group are finding fewer takers among the larger firms. firms that can be acquired to help grow and launch non-traditional, non-compliance-oriented service lines are in high demand.
partner succession is still a huge issue for firms with 10 and fewer partners. there is much more awareness that successfully building an internal succession plan takes time and we are finding firms willing to work on this much earlier than in previous years.
unfortunately, many firms are finding you cannot build a strong team overnight and even with five or more years, they often do not have a strong enough bench regardless of how much they are willing to tweak their owner agreement to make buyouts more affordable. there remains a preference to remain independent so undertaking a full evaluation before going to plan b remains popular with this.
consulting, consulting, consulting. the profession is getting the message for 2019.
traditional compliance services, including auditing, are going to be dramatically affected with technology in the next five years. will the up to 40 percent drop in hours because of greater efficiency result in merely a decrease in costs or will it force pricing even lower? most firms we work with aren’t waiting to find out and are focusing new growth in areas less likely to be affected by technology.
as m&a remains the most efficient way to grow, especially in new service offerings, firms are seeking acquisitions to jump-start new consulting offerings. however, they are finding the business models, valuations and kpis of consulting firms are different than standard accounting firms. deal structure and post-merger integration for the acquisition of consulting firms is proving to be challenging for firms even if they have a lot of experience with m&a of accounting firms.