pay

and two considerations for the working partners.

by marc rosenberg
retirements & buyouts

the vast majority of firms pay retirement benefits over a 10-year period. we occasionally see five to seven years at lower payout levels.

some firms under $10 million adopt five-year payouts for goodwill, reasoning that because five-year payouts are common for the purchase of a cpa firm, the same term should apply to their own buyouts.

read more →

how firms decide the capital payable to a retiring partner.

by marc rosenberg
retirements & buyouts

we know there are two parts to retirement benefits:

• capital
• goodwill

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the issues involved in determining the capital are very few and straightforward compared with the goodwill determination, which is far more intricate and nuanced.

in fact, there are four main variables in calculating the capital. this compares to 25 variables for goodwill. read more →

forget “one times fees” for goodwill.

by marc rosenberg
retirements & buyouts

one of the first and most critical decisions in creating a partner retirement plan is the overall valuation of the firm.

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the value of a cpa firm has two components: read more →

plus: making the math work.

by marc rosenberg
retirements & buyouts

why are cpa firms deficient at succession planning?

it is abundantly clear that cpa firms have succession planning challenges. partners overwhelmingly prefer the exit strategy of passing on the firm to younger partners vs. merging out of existence. but history shows that the vast majority fail at moving their firms into the next generation. what holds them back?

the answer lies in the classic pogo cartoon line: “we’ve seen the enemy and the enemy is us.” read more →

valuing a cpa firm for partner retirement purposes is much different than a valuation for merger purposes.

by marc rosenberg
retirements & buyouts

profitable, attractive firms, generally under $2 million, sold in a market with many potential buyers, will often fetch 110 percent to 150 percent of fees.

if this is the case, why do cpa firms value goodwill for retirement purposes at no more than 100 percent of fees and usually, 80 or 90 percent of fees? here are six good reasons why:

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9 factors that ensure retirement plans will pay off.

by marc rosenberg
retirements & buyouts

when a partner group crafts their firm’s partner retirement plan, they are hopeful that the plan will play an important role in their financial futures. they are guardedly optimistic that their buyouts will be realized.

but the path toward the retirement payday is a perilous one. many actions are necessary and a number of obstacles must be overcome for a firm’s partner retirement plan to pay off. read more →