firms of $20 million to $50 million in revenue will be presented with many opportunities.
by gary thomson
the rosenberg national survey of cpa firm statistics
continued exploration of capital resources will be a hallmark of the next 12 months. determining the cost of strategic priorities will drive a better informed exploration of the basic question: “from where will we get our needed capital?”
editor’s note: every year, the 2024 rosenberg national survey of cpa firm statistics asks the profession’s top consultants two sets of questions:
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- how do you think the next 12 months will unfold? trends? predictions? other thoughts?
- how would you assess the last 12 months? trends? observations? struggles?
more: firms not keeping all their clients | accounting still short on staff and students | recalibration is key for accounting profession | accounting firms upshift to corporate model | growth and complacency must concern accounting firms this year | the future of fees | how accounting firms are dealing with retirement | what’s your firm worth? private equity wants to know
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those sources include, but are not limited to, owners, banks, private equity, mergers, esops, etc. the potential sources are abundant … determining what’s right for your firm is a unique and focused effort to get it right.
i am specifically looking at firms of $20 million to $50 million in revenue as the ones that will be extremely active in the capital resource evaluation. as my firm grew and pivoted into a comparable revenue range, i, on one hand, felt we were well positioned. on the other hand, i looked at what it took to strengthen our position and keep the momentum going. firms in this range represent a significant group in our profession and, optimistically, i feel they are able to craft a lot of future success. these firms will be presented with many opportunities for growth, people, m&a, etc. and they will need to have a strong alignment of mission, vision, values and strategy.
to paraphrase a recent harvard business review article: most cpa firms are likely to underestimate what it will take to be competitive in the future. i find this to be true. i don’t say this in a defeatist way, i say that to get our attention. the firms that are successful in the next 12 months will have gone deeper on their investments, will have an aligned vision and strategy, and will drive accountability.
my “crystal ball” tells me the next 12 months will be highlighted by a lot of m&a within the top 500 firms, a compressed ability to raise fees, development of even better technology, including the integration of ai, addressing capacity, ideal client, pricing models, and a continued focus on governance and business models.
the last 12 months were highlighted by exploration: private equity, technology, innovation, capital resources, capacity creation, etc. if it’s true “the more things change, the more they stay the same,” the last 12 months validated that premise.
having just explored the latest ipa 500 report, the movement in both names and sizes of firms supports the volume of m&a activity that occurred. i believe the profession is wrestling with the legacy approach for next-generation succession with the more contemporary approach of transaction-oriented succession. my observation is: there is no one right answer. the firms that spent the time exploring vision, strategic priorities, cost of priorities, and evaluated the sources of resources to support the cost are the firms that were the “winners.” regardless of their ultimate decision, the process of thinking through these linked dimensions allowed them the clarity to make a future-focused statement about their future.
another observation – as cpas we were taught to have a healthy skepticism in auditing class. of all the things we remember well, this is the one we chose! i say that in jest but in reality, we need more optimism about the future of the profession. appropriately so, i hear a lot about talent, pipeline, pricing, innovation, technology, the “younger generation,” etc. but i often hear these topics in almost a concessionary tone as if “we’ve lost.” we’ve not lost … we must recalibrate and plan for a different future. i’m proud that many of the firms i work with have doubled down on investments in people, technology, strategy and governance to be better prepared for the future.
the last 12 months were great for many. the common thread: a well-conceived plan for the future.