Rosenberg Associates Blog
Marc Rosenberg, CPAI recently bought a new car. I was sitting in the office of “the finance guy,” who just turned 30 and seemed astonished when I told him what I do for a living. He clearly was ambivalent about being “the finance guy.” He asked me: “What do I do to be successful?” What follows may…
The amount of the new partner buy-in has changed significantly over the years at CPA firms. Years ago, the buy-in was determined by first, totaling the value of the firm (accrual basis capital PLUS the goodwill value of the firm) and then, multiplying it by the ownership percentage awarded to the new partner. The resulting…
Question from a MP: “Our approach for determining the buy-in for a new partner is to multiply a projected ownership percentage of 5-10% times the firm’s annual billings and discount the number by 20% for the person’s ‘sweat equity.’ “We discussed the buy-in matter with our next partner. He has brought in $30,000 of new…
Whenever a firm changes a major system that impacts the partners, maintaining fairness to those negatively impacted by the change can be a challenge. Here’s an example. When a firm whose partners previously paid their buy-ins to other partners decides to have new partners pay buy-ins to the firm going forward, there’s bound to be…
Here are 6 concepts for CPA firms to take into account for deciding how to structure a new partner coming into the firm: Should this person BE a partner? Too many firms shoot from the hip in determining who should become a partner, essentially re-defining promotion criteria every time they discuss the subject. Don’t you…
Here are some issues we’ve discussed with managing partners recently that seem to be causing bouts of insomnia: We have 2-3 managers we’d like to make partner over the next few years, but we are having trouble deciding what their buy-in should be. The current partner group has been together a long time and has…
I’m sure that this blog title alone stirs the hairs on the back of some of your necks. Let me explain, please. Before I do, let me say this loud and clear: I think it’s a good thing for firms’ partner criteria to include a provision for bringing in business. But the issue isn’t whether…
Firms ask me this question all the time. Here’s my response: Short answer Non-equity partners don’t usually have the same “rights” that equity partners have: a vote, capital buy-in, goodwill-based retirement benefits, obligation to pay retirement benefits to others, legal liability and a share in the profits. Short answer REFUTED Most firms never take a…
CPA firm partners keep lots of things secret at their firms that should be open. One of them is a written document stating the firm’s criteria for making partner. The main explanation we hear for not having such a document is that they are afraid creation of this document will backfire. They are afraid that…
A consistently strong observation I have made about CPA firm partners is that they really love their jobs. They love their clients. They love their work and its challenges. They love solving problems. They love the freedom and flexibility of being a business owner. And they love making more money than they ever dreamed of…
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