plus a worrying note on salaries.
by marc rosenberg
the rosenberg map survey: national study of cpa firm statistics
every year, we ask the industry’s top consultants to share their observations from cpa firms across the country. how do you think the next 12 months will unfold? and how would you assess the last 12 months?
more: outlook: private equity comes for accounting firms
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here are my thoughts regarding 2023:
- firms will continue to struggle with all facets of remote work. firms will never get back to working in the office as a norm, not because of covid-19, but because their people – especially partners – don’t want to work in the office full-time.
- sellers will continue to struggle finding buyers.
- cybersecurity issues will get worse before they get better (if ever!).
- the labor shortage seems to get worse every year. it’s bound to increase the salaries of staff if it hasn’t done so already.
meanwhile, issues from the past year remain.
- working remotely and its wide-ranging challenges may be the biggest game-changer to the cpa industry since 1978, when the cpas were allowed to solicit business. remote work can no longer be described as a trend because it’s here to stay. you can’t give a perk (if we can call the privilege of working remotely a perk) to people and then take it away. these days, firms are dealing with a wide range of remote work issues. it may take years before firms can flourish with it. to their credit, they are adapting, but many challenges are still to be resolved. yes, figuring out everyone’s work schedule is difficult. but even more challenging are training/mentoring of staff, especially younger ones, building a firm culture, business development, nurturing of client relationships, supervising work and evaluating staff’s work based on results instead of butts in seats.
- who wants to be a partner? firms continue to find a disturbing number of partner-worthy managers declining partnership offers. for two reasons: (a) staff see partners “working all the time” and are not willing to make the sacrifices they feel will be required of them. (interesting observation: will this challenge continue in an environment where it’s difficult to “see” the partners working “all the time”?) and (b) partners continue to suck at mentoring staff on what a great job they have.
- the m&a market continues to be robust. buyers are pickier than ever before, resulting in sellers realizing they have fewer options to find buyers and a diminishing ability to negotiate the price. no changes are foreseen on this except for the possible intervention of private equity with smaller firms.
- private equity. certainly the biggest new trend in the cpa firm industry. initially, it was geared toward megafirms, but it’s starting to trickle down to large firms below the megafirms. what’s the future of private equity? will it catch on? will it ever invade the domain of $5 million to 30 million firms? stay tuned.
- cybersecurity. if you want to get scared, attend a cybersecurity presentation. you’ll most assuredly leave with a heightened sense of anxiety and fear over the exponential growth of cybersecurity issues and incidents. adopting remote work as a norm has amped up the concern in cyber.
- the aging of baby boomer partners has caused two ripple effects: first, as stated above, the m&a market is hot with no end in sight; the only exit strategy for most retirement-minded owners is to merge up. second, there is an avalanche of small firms that are fortunate to have young managers willing and able to become partners. but a huge challenge is before them: how to bring these managers in as partners? small firms have very little or no experience bringing in new partners and they are at sea as to how to do it.