How Are Mid-Sized Firms Faring?

Source: The Marc Rosenberg Blog

The following blog post by Marc Rosenberg is reproduced in its entirety with permission.

The Rosenberg Survey team thought you might like to see a “sneak peek” of the results of our annual CPA industry practice management survey, the largest survey of mid-sized CPA firms in the country (over 400 firms this year).

Revenues were up 1.7 percent in 2010, a slight improvement from the 1.4 percent increase last year. Though the increase is small, it's noteworthy nonetheless because for the first time in two years, the growth rate increased from the prior year instead of decreasing. So, you might say the “bleeding has stopped.” Revenues were up for firms in all size ranges, though firms with annual fees in excess of $20 million experienced a higher growth rate (4.6 percent) than smaller groupings.

Income per equity partner (IPP), the CPA industry's barometer of firm profitability, also increased slightly. In 2010, IPP was $359,000 compared to $354,000 in 2009. The profit increase is attributable to firms continuing to operate with lean staffing levels, limiting most staff salary increases to token amounts and vigilant controlling of expenses. Firms invested heavily in marketing and sales, though these efforts were somewhat offset by continued fierce price competition.

Projections for 2011 indicate that CPA firms are successfully “riding out the storm.” Surveyed firms are projecting a 3.5 percent revenue increase for 2011. Given that firms made these projections when the year was half over and the tax season was behind them, the 3.5 percent increase should be reliable.

For the original post, read “Sneak Peek at Rosenberg MAP Survey Results.”

From The Marc Rosenberg Blog, http://blog.rosenbergassoc.com/, July 28, 2011.