<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
we consider the “structure” as the \u2018plumbing\u2019 of the private equity transaction. typically the investment creates an alternative practice structure (aps) resulting in two entities: an attest cpa firm which is 100% owned by the cpa firm partners and which is the vehicle for the firm to be able to continue to do attest work. the second entity will become a non-attest consulting company which is jointly owned by the cpa firm partners and private equity investor. the non-attest consulting company essentially leases employees to the accounting firm to conduct the attest work and perhaps the tax compliance work. it also would not be unusual for there to be affiliates or subsidiaries to the non-attest consulting firm.<\/p>\n
since the attest cpa firm only retains the audit and tax compliance work, the retirement plan (deferred compensation) that it had in the past may very well be reduced as part of the transaction since the accounting firm is not as valuable as it once was with the consulting revenues. it also would not be uncommon to see a slight reduction in draws and partner compensation. sometimes in the initial transaction, a portion of the proceeds go directly to the cpa partners in a \u2018dividend\u2019 form, and in firms where the partnership agreement and compensation plan require it, the retired partners may also share in that “dividend.”<\/p>\n
the new aps must satisfy aicpa 101-14 requirements and state laws:<\/strong><\/p>\n\neach director is a licensed cpa and attest cpa firm partner.<\/li>\n all owners of the attest cpa firm will also be employees of the non-attest consulting company.<\/li>\n the board of the attest cpa firm will include attest cpa firm employees.<\/li>\n<\/ul>\nthe attest cpa firm board is distinct from the non-attest consulting company board, so there will be two boards, and the private equity firm will have no representation on the attest cpa firm board.<\/p>\n
non-attest consulting company employees on the attest cpa firm board are not directors, executive officers, or senior management of the non-attest consulting company.<\/p>\n
the attest cpa firm is independently managed, with some oversight by the private equity firm:<\/strong><\/p>\n\nthe managing partner of attest cpa firm reports to the attest cpa firm board.<\/li>\n promotion to or removal of an attest cpa firm partner is the decision of the attest cpa firm.<\/li>\n there is a services agreement that provides that the non-attest consulting company does not control the governance, structure, or operations of the attest cpa firm, but does provide services such as personal (including licensed cpas), it, and back-office support. it will also include a statement that services rendered on behalf of the attest cpa firm by cpas will be under the direction, control, and supervision of the attest cpa firm and will be rendered in accordance with its personnel manual and other policies and procedures.<\/li>\n<\/ul>\nin our opinion, prepare yourself when it comes to cashing out. history has shown that it is not easy to \u201cflip\u201d a professional services firm and when done, often not done successfully. but when it is time to flip, there have been a number of public company exits, ipos, and perhaps some spacs, but there is little known about these transactions because they are private.<\/p>\n
so, if your partnership can accept the aspects of structure and governance changes, is a private equity infusion an effective vehicle to create partner wealth? we believe so…<\/p>\n
…but with the caveat that if a cpa firm has a strategic plan that it revises to reflect how strategies and tactics will be enhanced as a result of the private equity infusion and that the aps effectively delivers on that plan, private equity could be beneficial for the partners.<\/p>\n
but the question remains: is the gain worth the pain?<\/p>\n
with bank borrowing rates being very inexpensive these days and many firms under capitalization with partner cash capital accounts, these vehicles could also be considered as alternative vehicles for growth as well as a private equity infusion, but without all the bells and whistles that private equity demands.<\/p>\n
only time will tell if these transactions gain traction and are more successful than in the past.<\/p>\n
<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
<\/a> \nnew private-equity financing holds the promise of new funding for expansion.<\/strong> \nby dom esposito and anthony zecca<\/em><\/p>\npart 2 in a 3-part series. \nsee part1: is private equity the new source of growth capital for cpa firms?<\/a>\u00a0and eisneramper gets private equity backing<\/a><\/em><\/p>\n","protected":false},"author":17,"featured_media":88560,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","footnotes":""},"categories":[3184,2254,2327,2371,5,3120,3002],"tags":[],"class_list":["post-88517","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-advisory","category-growth","category-innovation","category-mergers-acquisitions","category-outlook","category-pro-member-exclusive","category-special"],"acf":[],"yoast_head":"\nanalysis: how outside capital can remake cpa firms - 卡塔尔世界杯常规比赛时间<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n \n \n\t \n\t \n\t \n