retirement

what a cpa firm is worth

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calculatorlook at the revenue stream. goodwill is another story.

by marc rosenberg
retirements & buyouts

to illustrate a cpa firm’s value, let’s use an example of a plain-vanilla or average firm:

  • annual revenues: $6 million.
  • six partners with ages spread evenly between 45 and 62.
  • average partner income: $350,000.
  • ratio of professional staff to partner is 3.5.
  • firm is located in a city with a population in excess of 1m.
  • clients are all in common industries such as manufacturing, real estate, health care, etc. no niches or specialties.
  • services are all traditional annuity types such as accounting and tax.
  • the firm’s accrual basis capital, primarily wip and a/r, is $1.2m.

now, let’s compute the value.

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‘show me the money!’ partners balk at retirement planning

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targeted retirement age as cpa ages
targeted retirement age as cpa ages

developing successful strategies for changing expectations.

by marc rosenberg
cpa firm retirements & buyouts

the concept of retirement for cpas is rather amusing.

younger partners (say, under 40) insist with unshakable confidence that the oldest they will ever work is 50 or 55. they have other things to do with their lives (own another business, do charity work, pursue hobbies, etc.) besides working at a cpa firm and they want to pursue these interests while still young.

older partners (say, over 55) see themselves working indefinitely, with 65 being the earliest age that they will even consider retiring. read more →

6 reasons to keep partners from retiring

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aquila
aquila

and 4 ways to put them to good use.

by august j. aquila
creating the effective partnership

there may be some senior partners who want to spend their remaining years basking in the sun or playing golf. but, given the negative and low returns of the stock market the last few years, more senior partners will be concerned about their economic future and will want to stay involved in the profession. this can be a win-win situation for both parties or it can be a lose-lose.

senior partners have a wealth of knowledge that you don’t want to lose. for example, they possess: read more →

9 essential calculations for retirement buyouts

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and the difference between smaller firms and larger firms.

by marc rosenberg
author of how to bring in new partners 

maybe you’ve noticed this too: many midsize and larger firms retire partners at one times annual fees or less, while smaller firms are often sold for well over that.

how can you reconcile those two very different valuations? the answer, of course, is in the math.

here are the nine essential calculations… read more →

valuing your practice for partner retirements

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how to brace yourself for the “baby boomer bubble.”

by gary adamson, cpa

i think about the bbb a lot. no, this bbb is not the better business bureau; it is the baby boomer bubble. there is constant reference by the news media about the aging of the baby boomers but i for one did not know exactly what it meant. until i googled it.

related: how to create a no-equity partner position in your firm | what a coach can do for you – and your firm | how to balance the six jobs of managing partner | planning a partner retreat for real results | the partner compensation checklist | how cpa firms make money in turbulent times

what i found is not good news for the accounting profession. the bbb is 76 million of us born in the united states between 1946 and 1964 and we are fairly evenly spread through those 19 years. that means the oldest of this huge bubble are 4 million folks who turned 65 last year. and, we have another 18 years to go!  read more →

four more years: clients delay retirement

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“boomers have been scarred.”

half of baby boomer clients who have postponed retirement due to the economic downturn expect to work at least four years longer than they originally planned, according to cpa financial planners.

fifty-two percent of cpa financial planners said their clients – who typically have between $500,000 and $5 million in assets – are at least somewhat confident in the stock market now — a turnaround from a year ago when 54 percent said their clients were not very confident.

more highlights:

  • 48 percent of cpa financial planners said their typical client is somewhat or very pessimistic about the u.s. economy amid gaping budget deficits and high unemployment.
  • 51 percent of cpa financial planners said at least one client was turned down for a mortgage or refinance in the past year. the most common reasons: lower home values and higher underwriting standards.
  • 44 percent of cpa financial planners said their average client emerged from the recession with increased net worth and 17 percent saw their net worth stay the same.

read more →