allan koltin: how small firms can thrive against pe-powered competitors | gear up for growth

how to remain independent when private equity comes knocking.

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gear up for growth
with jean caragher
for 卡塔尔世界杯常规比赛时间

gear up for growth is tailored specifically for public accounting firms with up to 100 team members looking to expand their practices intelligently and efficiently. each episode focuses on a topic crucial for accounting firms aiming for smart growth in today’s competitive landscape.

find more episodes here, including:

• mark koziel: transforming the cpa firm business model | gear up for growth
• joey havens: the role culture plays in firm growth | gear up for growth

follow jean caragher on 卡塔尔世界杯常规比赛时间 here. | get her best-selling handbook, the 90-day marketing plan for cpa firms, here | and watch for jean caragher’s other show, capstone conversations, with leading growth strategists from the nation’s most dynamic firms, also available on 卡塔尔世界杯常规比赛时间

1. learn how revenue size impacts a firm’s ability to remain independent.
2. find out about allan koltin’s three t’s – talent, technology, and transformation – and the fourth t that sparks worry.
3. discover how ebitda is an obstacle for many firms in obtaining investment and what to do about it.
4. understand the role firm growth plays in attracting and retaining talent.
5. learn how firms not receiving pe funding can compete with those who are.

upcoming episodes of gear up for growth will feature more of the profession’s brightest luminaries, including:

• mark koziel from allinial global on new business models for cpa firms,
• tom hood from the aicpa on the connection between recruiting and retaining the best talent with an environment of supportive learning,
• joey havens from horne cpas on the role culture plays in firm growth and
• jen wilson from convergencecoaching on top-shelf people practices.

about allan koltin

koltin consulting group, inc. is a chicago-based consulting firm that specializes in working with professional and financial services firms in the areas of practice growth, practice management, human capital, and mergers and acquisitions.  

highly sought for his ability to engage and inspire audiences, allan koltin enjoys delivering keynote addresses at conferences throughout the professional services industry. his passion is facilitating strategic planning retreats for firm leadership and partners. his specialties include strategy, governance, profitability, compensation, growth, human capital, succession, and mergers and acquisitions.

for the last twenty-four years, allan has been named by accounting today as one of the top 100 most influential people in the accounting profession. for the past twenty-three years, allan was voted as one of the most recommended consultants in the “annual survey of firms” conducted by inside public accounting. for the past decade, allan has been named by cpa practice advisor as one of the top 25 thought leaders in the profession and, in 2016, they also inducted allan into the accounting hall of fame. allan was one of the first to be inducted into the association for accounting marketing (aam) hall of fame. 

transcript

jean: hello. thank you for joining in for “gear up for growth”, our podcast powered by 卡塔尔世界杯常规比赛时间. i’m jean caragher, president of capstone marketing and your host. i’m happy to introduce today’s guest, who is no stranger to the accounting profession. allan koltin is the ceo of koltin consulting group specializing in mergers and acquisitions. according to his website, allan has been involved in over 160 accounting firm mergers. and, allan, i can’t see any merger announcements lately without your name attached to it. so, you’re in all this m&a. prior to koltin consulting, allan served as the ceo of pdi global for 29 years. how about that as a blast from the past, allan?

allan: that’s impressive.

jean: what a guy. allan has a list of accomplishments and accolades that is as long as my arm, so i am going to highlight just one. in 2023, allan was voted the second most influential person in accounting by the top 100 most influential people in accounting. and i’m sure that recognition by your peers, allan, is particularly special for you.

allan: thank you, jean. it just means i didn’t piss anybody off, i guess. i don’t know, you know?

jean: we’re not, anyway, right? oh, allan, thanks for joining me, and we’re gonna be discussing an important topic to our listeners, how small firms can remain independent.

allan: excellent.

jean: so, my first question is related to your lifecycle of cpa firms. so, i am going to share my screen.

allan: and, jean, while you’re doing that, i just wanna return the kudos. you know, it sort of hits me. we met about 40 years ago, not to age either of us. maybe it was a little less. but all you’ve done for marketers within the profession, one thing i’ve always admired about you is the personal time you commit to helping others. whenever somebody new, somebody experienced reaches out to you with a question, you’re always there for them, and you’re always giving great advice. and, you know, i know you’re not old enough to have a legacy, but i can already reasonably predict that the legacy of jean will be how much she helped others to be successful in our profession. so, thank you for all you’ve done yeah..

jean: thank you so much. that means a lot to me. thank you.

allan: thanks.

jean: so, as we look at this slide, as i mentioned to you earlier, this came from another presentation, and i took copious notes there because i know you always have important things to say that i need to know. so, given our topic about how small firms can remain independent, how do these revenue size groups of firms, how does that impact a firm’s ability to remain independent?

allan: yeah. so, you know, independence is a state of mind. my experiences in the startup firm to the 2 to 5, maybe even to the 2 to 10 million, it’s more of a living in the moment. you know, at some degree, we’re just trying to survive. we’re trying to figure this out. the business hasn’t really formed. what we are is a group of producers, a couple of partners, maybe three, four, five. and we all have books of business, and we all bring in business, we serve clients, we try to get talent. and strategic planning is, you know, sometimes where we’re going for lunch on, you know, tomorrow. that’s level one to me.

level two is, “we got this.” we are now saying, “we’re gonna go build a firm.” you know, i always get the question, “we don’t have a partnership agreement, should we have one?” yes. “how do we bring in a new partner? is our business worth anything? and if so, how do we value it? and then, how do we go about doing a buy-in? and do we have junior partners? do we have income partners?” a whole structure. and with it, we realized quickly there has to be a managing partner. and, you know, usually in those size firms, you’re not gonna pay a lot of money for it. so, someone typically has to step up and do it for the greater good of the firm. what happens on that journey, however, is our clients get larger, their needs get more sophisticated, things like industry specialization and depth of resources, technology, capital, growing the business, you know, the old working on the business versus working in the business takes center stage.

and now, as we approach that level three, we probably for the first time are seriously thinking, “would we be better together with a strategic and capital partner, a larger accounting firm? and what could we achieve for our people, our clients, and our partners if we were to do that?” so, it’s not an exact science, but at 30,000 feet, that’s a journey that i see pretty often.

jean: so, tell me the significance of that 10 to 40 million because your strategy that you listed there is life as an independent firm. so, do you feel like they’re big enough at that point that they could make the decision, “we want to remain independent,” and they’ve got the manpower, you know, and the skills, and the plan to make that happen?

allan: well, clearly, what’s happened if you just take the last three or four years, you know, i call it the perfect storm, and maybe it should be the imperfect storm. and, you know, we talk about the 3ts. the first one is talent. we used to have, i don’t wanna call it abundance, but we had enough talent to go around for many decades. finding it, keeping it, you know, we didn’t have the great resignation where 300,000 people left the profession overnight. we didn’t have double-digit reductions year after year after year after year of kids coming outta college saying, “i don’t want to get an accounting degree. i don’t wanna be a cpa.” so, that in and of itself for many firms put a stoppage on growth. you know, when i ask firms, “could you grow faster and better?” “yes. but we don’t have the capacity to do it”.

the second is technology. i mean, you know, everybody talks about the negative technology, the ai and bots, and replacing what, you know, people do. i think it’s a huge positive because, you know, when i talk to the kids, they don’t wanna do the mundane, they don’t wanna do the bottom feeder type work that generations before them didn’t ask questions. you know, as one person said to me recently, “by the time i did my 15th partnership return, i knew how to do one. if you think i’m gonna sit here and do 1,500, you’re outta your mind.” so, it’s a new generation, it’s a new day, they’re much smarter. we need to push them in the fire quicker and give them more challenging work. so, to me, technology is the best thing out there. it’s not a loss of job, it’s a retrain and a refire that you’re gonna be brought into it at a lot quicker pace.

and then the last one is transformation, you know, what got us to the dance? tax returns and financial statements? not anymore. that’s gonna be the given. it’s the advisory consulting, the outsource services, the impact that we’re delivering as business and financial advisors. so, it’s a new day, it doesn’t surprise me. the m&a frenzy has continued. i think in the old days, it was all about strategic planning. now, it’s more about succession planning. now, it’s more about strategic planning, you know?

jean: wonderful. thank you for that. so, a good friend of ours, gary shamis, in an “accounting today” article, identified three options for today’s accounting firm. one is to seek out private equity, two was to sell to another firm, and three was to remain independent. so, my next question is, when should an accounting firm remain independent?

allan: so, i think it’s a healthy question to ask. when i facilitate partner and board retreats, it’s a standard question, just like, do you belong to an international accounting association alliance or network? do you have a retirement age? do you have a performance-based partner comp system? and what you’re really looking at is internal succession versus external. but today, i think it’s more of a strategic question, remaining relevant, remaining sustainable.

you know, you put a group of partners in a room and ask a question, some are risk takers, some are steady eddies, some don’t even wanna be in the room. they’ve got billable work they gotta get done. so, you know, we call it, kiddingly, the dysfunctionality of the partnership model. we all have the ability to say no, but rarely can someone say yes. and that gets into the whole issue of leadership.

you know, i don’t think when you get to be a certain size, you can operate by committee. you have to have strong leadership. so, to have that, a, you gotta have the skillset, b, the person’s actually gotta wanna do it, c, the firm has to be willing to compensate them equal to or greater than what they were getting paid as a producer. otherwise, why would they be so stupid to do it, right? and then the partners, you know, have to have the willingness to be managed, set goals, be held accountable, all those things.

so, the culture, if you will, is probably the thing that they realize would change. and then it gets into that big question, do we want to change? you know, as one partner said to me recently, “i’m not gainfully employable anywhere else.” i said, “what do you mean by that?” they said, “i just don’t comply with a lot of things. i do my own things, i’m a sole practitioner, and they sort of let me do my thing.” and, you know, some just need to stay like they are.

so, i don’t know, i see a lot of firms today that don’t have to do anything, they don’t have any major problems yet they’re merging, you know, best-in-class firms. and i see firms with a lot of problems staying as they are. so, you know, i haven’t figured out the formula yet of what it is, but i think it comes back a little bit to what do we wanna do with the business, and can we achieve it? and just like i always say, businesses in the real world, it’s the same journey they go through. i am a believer that nothing in business is forever. so, if it is gonna change, when is that gonna change, and how will that impact us? i think that’s something we need to always be thinking about.

jean: right. i think another point that goes along with this, you know, decision to remain independent, because, you know, i’ve worked with a lot of firms, too, that tell me, you know, “we wanna remain independent,” but they really don’t have things in place to make that happen. and then in whatever period of time, you know, i’m reading about how they’ve, you know, merged up into a firm. and you mentioned leadership and strategy. so, there needs to be a consensus among the leadership about what the long-term strategy of the firm is, and what the vision of the firm is. and there’s still many, many firms that have not agreed upon that.

allan: yeah. it all comes back, jean, to strong leadership. you know, if we’re still running, where we all sit around the table, and if one abstains or one is against it, we don’t do it. you know, the kick-the-can mentality to the next year sets in. great firms, they make lots of decisions, they make fast decisions, and they make tough decisions. and, you know, sometimes people say to me like, “well, if you had to pick one thing, what is it?” you know, the ability to do those three things make a huge difference. they’re more apt to take risks, they’re more apt to cut losses, they’re more apt to deal with conflict, and the end product of that is usually a better-run firm, and hence a more profitable firm.

jean: right. okay. so, i wanna dip our toes into the private equity arena for a minute. and you’ve been quoted as saying that more than half of the cpa firms in the country won’t qualify to be part of private equity. so, what are the pe companies looking for when they’re investing in accounting firms, and what do those half of the firms in the country not have that don’t make them a good candidate for the pe companies?

allan: yeah, great question, jean. people ask me, “what’s it been like, you know, three and a half years with all these private equity clients?” and i say, “i feel a little bit like the loan officer at a bank and telling a business owner, ‘i’m sorry, but you don’t qualify for the loan,'” which is never a good thing. and the analogy is the private equity group, it’s a simple mathematical formula. ebitda, which to me is excess profitability times some multiple, the multiple’s an indication of, are you a best in class? are you good? are you average, you know? that equals the enterprise value that they’re going to offer you for your business. and the problem is, how do you create ebitda in an accounting firm because, as you know, every year, we clear out the till? there is nothing.

so, what we have to do, they use the term scrape. we have to take partner profitability and give it to the house, give it to the private equity group. well, if we’re in the bottom quartile or even the bottom half of average partner incomes, guess what? we don’t make enough excess profitability to create an ebidta to put times a multiple to get to an enterprise value. so, i’ve had mergers go on where the peo and accounting firm said, “look, allan, we don’t wanna insult them, but if we go through this process based on their limited profitability, they’re not gonna be happy with this. the best thing we can do is pull out now.” and so, that’s the comment. you have to be probably in the upper quartile, for sure in the upper half. and so, by definition, if i would’ve said half the firms don’t qualify, that’s what i meant.

you can imagine i don’t retain a lot of those clients going forward. they don’t like me when i say that to them. so, i try to say it in as nice a way as possible. and sometimes they’ll say, “we’ll just go back and get more profitable.” how’s about, let’s stay as an independent firm, let’s put a level of governance in, let’s make the tough decisions we’ve been talking about forever, and let’s really run it like a business. let’s not be a 501(c)(3) anymore, let’s just pretend we’re in business to make money. and, yeah.

jean: yeah, the accounting world is such an interesting space right now because there’s also a lot of talk about, you know, the partnership model, and we’re not gonna get into that today, but of just changes that need to go there also, you know, to really run it more like a corporation instead of a bunch of, you know, sole practitioners sharing a name and an office. and, you know…

allan: you know, jean, i was introduced recently at a conference, and they said, “our next speaker…” ready for this? and you could take the same credentials. “our next speaker has studied the brain of an accountant for over 40 years and invested over 100,000 hours in doing that. he’s gonna talk to you today about that.” it was to a financial services company.

and, you know, the one sentence would be there are exceptions, but most of us are conservative. most of us don’t like risk. most of us like predictable behaviors. we’re not a creature of change. and adaptability and trying new things, not for all, but for most, you know, is a bit of a challenge. so, throw something new like private equity or other things in, and oftentimes the initial reaction is the wall goes up, it’s out of our comfort zone

jean: for sure. and then you get the big risk takers, the people that are willing to just jump in there first, you know, like a charlie weinstein, you know, or others that have been leading the charge here related to…

allan: you know, what people don’t know about charlie weinstein, the ceo of eisneramper, who was the first large firm from an accounting firm to do a private equity deal, is he was looking at that 15 years ago before anybody knew what it was. he got serious about it 10 years ago. and, you know, privileges of being the early adapter first in market, you know, i think if you had him or towerbrook capital on the call, they would jointly tell you that that investment has been a grand slam home run, not just for the private equity group, but for the partners and associates of eisneramper. yeah.

jean: that’s terrific. how do firms not receiving pe funding compete with those who are?

allan: yeah. the beauty of our profession, as long as you don’t do a bad audit or tax return, you can stay in business forever. so, you know, i’ll use the top 25 as an example. you know, by the end of this year, a third of them will have already done a private equity transaction, a third of them will be considering it, and a third of them are hard nos. “it’s not us, we don’t need it, and here’s why.”

so, i think everybody agrees we need to put more capital into the business to deal with the transformation, technology, and talent issues we’ve talked about. so, what do some do? they increase the buy-in, they increase the capital requirement. you know, the capital requirement for most used to be a rounding error. today, some of these firms, it’s one times your annual income. that’s the amount of dollars you have to leave in the business. others will go to the bank and take a line of credit, you know, they’ll take debt. and then there’s a group, believe it or not, that’s out there that…and this is a firm of all sizes, they can’t make any decisions. so, they never have to make a decision to spend money, therefore, they don’t need money, and they will just keep grinding until they can’t. and, you know, i think that’s gonna be more attributable to the small firm where they’re sort of living in the moment.

but, you know, every day there’s something new. we’ve had two big firms do esops. we have two firms went to the bank and established a line of credit as a way to have dry powder to go out and compete with private equity. we’ve had other mega-firms merge together, to do mergers of equals. so, i think the big thing on transformation is it’s not private equity or stay as is, it starts with what do we wanna achieve, and then what’s the best mechanism to get there?

jean: right. i think that’s a great message because with this podcast, you know, we are focusing on firms with 100 people or less. and i know those folks are looking at that next level, you know, to those firms, you know, up to, you know, 200 people. so, what you’re saying is important for a firm of any size. although, you know, from the pe side, i think we’re hearing it mostly from the big, big firms that there have been smaller firms as i understand it, you know, the 10, 15, 20 million. but what you’re saying in governing your firm and making a decision to grow your firm or not, you know, each firm has the opportunity to decide, “this is how we’re gonna run our business, and this is what we want from it, and this is what we want for us and for our people, and that’s how we’re gonna operate our firm.”

allan: yeah. spot on.

jean: okay. so, tell me your thoughts about new firms being formed from experienced staff or managers because they don’t wanna be part of a pe-funded firm or culture. you know, could this be the next wave of independent firms?

allan: yeah. so, it’s very insightful. jean, i’m gonna take your question in a little different direction. every year when accounting today or inside public accounting puts out the top 100, or 200, or 500, whatever the number is, knowing most of the firms, i go through it. and this year, i did something interesting. i started with the top 100, then i went to the next 100, but i went to the top 100. i said, “how many of these firms started in this century?” and it may not surprise you that i didn’t get to fill one hand. and unlike the ’70s, ’80s, and ’90s, which is when all of these firms put up a shingle, started with nothing, and, you know, grew something, the young generation today, for whatever reason, doesn’t seem as inclined to be starting accounting and tax firms.

you know, think about it in your own world, like, we just don’t see the abundance of startups. and i wonder, i say, “is it because the capital to start?” i don’t think so. “is it because of standards overload it’s so technical, you need a village around you?” i don’t think so. “is it because culturally the kids don’t wanna be accountants anymore and there’s so many other opportunities, maybe there’s something to it, or is it because it’s like the number of hours you work, the more you work, the more you make?” you know, there’s still some of that out there, and young generations, today, they don’t wanna work to work, they wanna work to live. actually, some wanna live to live, they would just bypass the work. but that’s just the editorial comment.

so, i don’t know if there’s something going on. so, when you ask the question, it’s a depleting asset. new, young firms starting up when, you know, i’m working with one here in chicago, a great firm, and they’re young, they’re first generation, they’ve been around 15 years, they’re all in their 40s. and, you know, i call them the unicorn, and they’re like, “what do you mean unicorn?” i go, “you don’t exist anywhere else.” i can count on less than one hand young firms like that, where the old partner is 47. you know, i recently came across one in florida and, you know, it never occurred to them that they were doing something that not many in their generation did. yeah. so, i don’t know if that was specific to your question, but, yeah, go ahead.

jean: it’s interesting. so, to maybe even look at it in a different way, you know, those people who may not prefer to work in a pe-funded firm, you know, because from what i understand, you know, the expectations of these private equity companies are high in growth and revenue and the speed at which they do things whereas, you know, we both know accounting firms can move a little slow. you know, they can be slow in making decisions. they’re looking to have a compromise, you know, among a partner group as opposed to having a leader making the decision. so, if they leave those firms, it might not be to start another one, but as you said, to just use their skillset in another profession.

allan: spot on.

jean: it’ll be interesting, you know, in the future. so, just in the way that we’ll all be looking at three to five years from now, the results of all of this private equity infusion into the firms and what the results have been, it’ll be interesting to see if, in fact, there are some entrepreneurs among the young ones, like you were mentioning, that do have the motivation and the drive to build a business.

allan: yeah. you know, we also have bias. many of us, the first wave of consolidation was public companies, you know, companies like h&r block and american express, and they, at some point, got out of the business and were deemed to have been a failure. but nobody really talks about cbiz. you know, cbiz was the third one. and we all invested in cbiz seven years ago when the stock was 7. i think it closed today at 77. it’s a wall street wonder, but at a deeper level, when you look at their associate engagement scores or their director engagement scores, they’re happy people.

so, yeah, there’s different ways to do it. and because one doesn’t do it right, someone else can. just like private equity groups. you know, i would tell you that there’s somewhere they’re gonna micromanage the crap out of you, if i can say it that way. and you learn not to ask a question because if you ask a question, they’ll say, “wow, that’s interesting,” and they’ll put a spreadsheet together to analyze it. and there’s others where they say, “look, like, we have a day job, too. we wanna get great firms and great leaders. go do your thing. we’re not gonna be on top of you. but if you have a major capital or strategic issue or decision, let’s talk.” so, just like there’s all different kinds of accounting firms, guess what? there’s all different kinds of private equity groups.

jean: right. yeah. and i’ve read more of when you’ve been quoted and written about that topic, and you’ve said, “there’s lots of private equity companies out there. it’s really important for a firm to work with the right one, that it’s not just solely about the numbers, but the bigger picture of how accounting firms operate.”

allan: yeah.

jean: yeah. okay. what haven’t i asked you that you thought i would?

allan: i thought you were gonna ask a little bit more about…just because of our connectivity in marketing and sales and growth, and, you know, where that’s going today, you know, it is amazing just in a couple of years how strategies have moved. we used to be brick-and-mortar strategies. i mean, i never realized it, but if i was in atlanta, georgia, and i serve contractors, that’s all i thought about was, you know, “let me get the list of associated builders and contractors in atlanta,” and that’s who i target. in today’s world, anybody that does construction is a prospect. in today’s world, talent can be sitting in phoenix, arizona, and with a remote workforce, they can be part of our construction practice.

jean: yeah, that’s right.

allan: and i think what i would tell you is that some firms have figured that out, and they have an aggressive plan, size doesn’t matter, and others are just still living in the moment, right? it’s almost like they wouldn’t know strategy if it hit them in the face. yet, when you ask them how they’re doing, they’ll say two things, “we’re making more money than we ever made. well, we’ve been blessed the last three, four years. we can raise rates in ways we never had the guts to raise. and because of lack of capacity, we’re getting rid of crappy clients, and we’re producing a more profitable firm.”

but, you know, i would offer up that that’s not a forever. i think the golden age, when i look back at my, you know, four or five decades, depending how long i stay, i’ll remember that window from 2020 to 2024, that five-year period is probably being the best time in public accounting to grow a business and make money. now, the truth is there’s an asterisk, the asterisk is many of us killed ourselves because we couldn’t find enough people to do the work. but earnings-wise, it was a great time. we could raise rates. clients said yes. you know, the client knew if they went down the block and knocked on two other doors, they’d say, “sorry, we’re at full capacity.” and i’m proud of their profession that we’re getting paid what we’re worth, finally, you know?

so, i don’t know, we should have a big celebration. but, you know, i told you about the 3ts, technology, talent, transformation. i’m worried there’s a fourth t, and it’s called trouble. and trouble is the world we know right now isn’t gonna stay like it is forever. and there’s going to be changes that are gonna happen, and we need to be thinking strategically, you know, ahead of that game.

jean: can you speak more to that?

allan: yeah, i think that … let’s start with talent because all roads lead to talent. right now, to get a star and keep a star, let’s just go there, and that’s if you can find the star, you have to overpay them, you have to rapidly promote them, you have to give them really interesting work. and this 10 to 15-year apprenticeship like that went out with the outsole. it’s not gonna play anymore. so, to do all that, what are the foundations you have to have? well, you have to be growing organically, double-digit. you have to be uber profitable because if you’re gonna pay ahead of the wage rate, you’re either gonna be able to do it because you make a lot of money, or the partners are gonna make less.

to promote them, you have to have a pathway of accelerating their career, which, again, means rapid growth, and you have to have the client work that they’re gonna find interesting and like to do. oh, and, you know, if you got them doing sort of the lower-end mundane work that they don’t wanna do, what’s the reward when you’re really good at doing that work? the partners give you more of it. and eventually, you burn out, and you leave, and you go somewhere else.

so, you have to be heavy investors, probably in some type of offshoring, or at least created inshore. you’ve gotta be producing technology to lift a lot of that work away. so, the business has gotten much harder to make work. and that’s why i labeled decision-making as almost like the umbrella around it. so, yeah.

jean: and talk about the importance then of marketing and business development, and having that marketing plan, and creating those niches, and all those specific tactics that firms can use, and to be consistent in your marketing, and you’re not starting and stopping based upon the calendar. so, that’s a big thing that these smaller firms need to pay more attention to if they wanna remain independent, just what you were saying, they’ve gotta be able to pay their people more, they’ve gotta grow to pay for all, you know, the technology and the talent, that, you know, hopefully, this could be a wake-up call for some to decide, “okay, we’re ready really to be more strategic and business-like, if you will, with our firm.”

allan: yeah. you know, the one thing i’ve said, you asked before about, you know, firms that have chosen not to go the way of pe or to do something transformational, but if you look at the ones that have, and even include, you know, the bdos, you know, the ones that have done esops and things, the mantra is to give young people a piece of the rock. you know, the way our business is set up today, you get nothing. you don’t unlock any value until you’re 65, and then you get a measly two times, you know, your average earnings over 10 years is ordinary income without interest, you know, all of it.

and what i’ve seen the lightning rod is, is people in their 30s or early 40s now having equity, and i’m beginning to see those firms now use that as a recruiting tool going into other firms and stealing stars and saying, “hey, we’re not gonna just give you a bump in your salary or a signing bonus. so, of course, we’ll do all that, but we’re gonna give you a piece of equity at an early age, and you can cash that out in five, six years.” and the kids today want a piece of the rock. so, that’s something, again, you don’t have to do anything transformational, but in your game plan, if you can’t at least accelerate their growth plan and move them quickly through the system, they do become a flight risk.

jean: right, because they’re gonna leave. okay. so, my last question is a bonus question. where is your favorite vacation destination?

allan: oh, what a great question, jean.

jean: i know you’ve traveled a lot, so you might have to think about this, right?

allan: it probably has to be the one we just did the last two weeks of december. it was the first time we went to africa. we went on a safari, you know, sharon and jack, brian and julia, and it was insane. and, you know, when you grow up and you’re watching “lion king” and “jungle book,” you know what i found out? those movies, they’re real. and when you sort of see how the animals survive, how they thrive, how they work together, you know, at night when they know that the lions are coming out, the tigers are coming out, they all band together. they all go by the lakefront, and they hang out. and there’s power in numbers.

and i never knew this with a zebra, but the stripes, it looks like one big creature. so, when you’re all together, you know, somebody’s less apt to charge the mound. of all the things on the bucket list, doing a safari in africa was beyond imagination. thank you. i have to return the question. what about you? what was your most interesting one?

jean: okay. and i’ve been fortunate to travel a lot, too, you know, through different roles i’ve played, you know, so i’ve got all 50 states checked off. so, we’re focusing on countries. so, i would say mike and i took a river cruise along the rhine from basel to amsterdam, and we actually arrived in basel early and spent some time with tracy crevar warren…

allan: oh, how nice.

jean: …and her husband, and that was fantastic. and in june, we’re going to greece, and we’re gonna take a cruise to italy, and stopping in montenegro, and croatia.

allan: that is insane.

jean: so, i think that’s gonna be awesome, too. so, yes, we’re blessed enough to be able to do this, and, yeah, [crosstalk 00:37:28].

allan: please send pictures. wow.

jean: oh, my gosh, yes. oh, gosh. allan, thank you for your expertise today.

allan: thanks, jean.

jean: it’s always a joy talking with you. and thanks to everyone for tuning in to “gear up for growth”. be sure to check us out the next time when we focus on another topic crucial for accounting firms aiming for smart growth in today’s competitive landscape. i’ll see you then.