is it the pot size or the players?
by gary adamson
the people challenges will intensify with firms looking more to offshoring and beefing up their campus recruiting efforts to chase fewer graduates. remote work is here to stay – the focus will be on doing it better in terms of work management and people expectations/management.
more: outlook 2023: top five trends | outlook 2023: compensation gets creative | outlook 2023: the office is over | 2023 outlook: private equity comes for accounting firms
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firms will be evaluating how to “keep our culture” in the face of a remote work environment or perhaps the question is what does our new culture look like. m&a is off to the races with pent-up demand because of covid-19 and the private equity money entering the market. the people portion of the deal will be more important than the client portion.
the last 12 months are probably best described as the second half (final chapter, hopefully) of covid-19 and its impact on firms. it was the second busy season of remote work and it was better in terms of work flow and people management but far from ideal. firms are still trying to figure out the remote environment including how much of their workforce will want to continue working from home and to what extent.
the people shortage is as bad as i have seen it in my 40+ yeas in the profession with no end in sight. the shrinking number of accounting graduates available to hire at the entry level has magnified it.
except for several large deals, m&a activity was very slow during 2020 and 2021. things have picked up during 2022 for small to midsized firms and pe money entered the market early in 2022 focused on the top 100 firms. too early to tell what impact pe will have on the market overall especially beyond the top 100 firms. one thing is for sure and that is that the baby boomers didn’t get any younger during the pause in 2020 and 2021 so the market should continue to be very active beyond this year.
firm economics held up well during the last year with average income per equity partner rising significantly. whether that can continue is the question with staffing costs rising much faster than the top lines of most firms. the gains over the past 12 months may have more to do with a fewer number of equity partners splitting the earnings pot than the size of the pot itself.