What's in Store for 2015?
Source: The Marc Rosenberg Blog
The following includes excerpts, reproduced with permission, from a blog entry by Marc Rosenberg. In it, Rosenberg reflects on recent industry trends and how they will shape the coming year. Here are some of the highlights:
Partner compensation. The exodus from formula comp systems to compensation committees continues. Partners have come to understand that (1) formulas encourage behaviors that are harmful to the firm such as hoarding clients, partners performing staff-level work vs. delegating and partners working as silos vs. working as a team and (2) the comp committee is the best system for balancing the value of traditional production metrics vs. intangibles such as mentoring staff, managing the firm, loyalty and teamwork.
Partner retirement/buyout. As the average age of CPA firm partners continues to climb, firms are taking a hard look at their existing partner retirement agreements. I reviewed dozens of agreements this year and repeatedly found out-of-date handling of vesting, notice, client transition requirements and how “retired” partners are compensated for working part-time.
Mergers. 2014 was our biggest year ever for mergers and 2015 will be even busier. My one concern: The number of firms interested in upward mergers is so enormous that, at some point, the buyers will be unable or unwilling to consider every firm, and one or both of the following will occur: Weaker merger terms or fewer interested buyers.
New partners. Aside from merging up, firms' primary succession planning strategy is bringing in new partners. Probably the biggest change in this area is the near elimination of the term “ownership percentage” from the CPA firm practice management dictionary. It's seen as the best way to make the buy-in affordable for new partners while ensuring that compensation is performance-based rather than ownership based.
For the complete entry, read “2014 CPA Firm Industry Trends: What We Saw.”
From The Marc Rosenberg Blog, December 29, 2014, blog.rosenbergassoc.com.