What Will the Profession Look Like in 10 Years?
Source: CPA Leadership Institute Leadership Forum Report
Each month, the Leadership Forum Report asks experts in the field to weigh in on questions about the accounting profession — trends, best practices, the future, and more. Following are this month's question and highlights of what the experts had to say.
What is your prediction for the make-up of the accounting profession in ten years given the significant number of mergers that are occurring at all levels? Is the future for merger activity pointing towards a buyer's market or a seller's market? Would you have answered differently three years ago?
“The CPA profession in 10 years will resemble the law firm industry, with many more mega firms that are still a notch below the national or international firms. This movement is already well under way.
People have been predicting the demise of the "small" firm for decades. It hasn't happened and it never will. For the most part, large firms are unable or unwilling to service small clients. But small firms are ideally suited to serve small clients do to their lower fees, more personal touch and flexibility. However, the barriers to entry for small firms has been increasing in recent years, due especially to the dearth of staff, but also due to lack of a diverse service portfolio and less effective use of technology. Large firms have a tough time recruiting; think how tough it is for small firms to recruit staff.
Describing the entire merger market as a buyers or sellers market is nonsense. The merger market always has been and always will be segmented. A successful small firm in a large market will always face a seller's market because of the abundance of buyers. Almost any firm in a small market will face a buyer's market due to the small number of buyers. Firms with young, talented personnel will always be in a seller's market because EVERYONE needs great people. I DO feel that buyers are getting smarter and more difficult to negotiate with. Many of today's buyers are larger, more sophisticated especially due to their merger experiences, and less inclined to ‘jump' at mediocre firms or firms that aren't a good fit.” — Marc Rosenberg, The Rosenberg Associates
“Three years ago it was most definitely a seller's market. But now with the continued volume of mergers — particularly in primary markets such as New York, Chicago, LA and Miami — it is gradually becoming a buyer's market because of the glut of firms that have not planned for succession and are now looking toward a merger as their solution. As a barometer of this shift firm valuations have been dropping steadily.” — William Carlino, Transition Advisors
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From CPA Leadership Institute Leadership Forum Report, December 2015.