Rosenberg Associates Blog
Marc Rosenberg, CPAQUESTION FROM A READER We didn’t contemplate an owner leaving before normal retirement age unless it was due to death or disability or we had to fire them. However, as we were discussing hypotheticals at a recent partner meeting, we came to the uncomfortable conclusion that, currently, there’s nothing to stop owners from accumulating large…
Kristen Rampe, CPAWe occasionally receive lengthy replies to our blogs and like to share our readers’ perspectives. A senior manager of a three-partner firm in the Midwest wrote to us on the topic of succession and buyouts, following my April Fool’s blog on raising the minimum retirement age to 85. This is Part 1 of a 2-part…
A firm on the East Coast with 11 partners and revenue of $28M asked me this: QUESTION A long-time partner, a “nice person,” is 69. She has been a fairly good rainmaker over the years, but during the past five years or so, she has slowed down and transitioned many of her clients. She…
We polled our audience of partners to find out the approximate average value of the life insurance policy (where the firm is a beneficiary) that they held on equity owners, at the date the policy was purchased. Many, but far from all, firms choose to hold life insurance on partners to assist with paying any…
Partner contributions to a firm are typically rewarded in both handsome compensation currently, as well as a buyout or deferred compensation upon retirement. What better way to reflect the value that an individual has created in your business over decades of commitment? When partners retire, amounts owed need to be calculated and paid. The calculation…
Warning: This article may be very difficult for partners over 55 years of age. It could trigger high levels of anxiety and even tears. A journal article I wrote about 15 years ago (yes, before blogs!) was “Partners: Get A Hobby!” I got as many compliments on this article as on any of the 500…
Amanda Lilley, CPA, SHRM-CP, PHRYou may be wondering why the Average Annual Value (AAV) method is a common method accounting firms use to determine each partner’s goodwill amount for retirement purposes. You may also be wondering what the AAV method is and how it works. Whichever camp you’re in, you’re not alone! Let me help you by demystifying answers…
In this two-part series, Darth, a 42-year-old partner sues his former firm, Force CPAs, for a larger buyout payment. The courtroom dialogue will share with you the facts, evidence, and arguments from each side as we explore industry trends related to payments for withdrawing partners. [Read Part 1 of the series here.] We continue below…
In this two-part series, Darth, a 42-year-old partner sues his former firm, Force CPAs, for a larger buyout payment. The courtroom dialogue will share with you the facts, evidence, and arguments from each side as we explore industry trends related to payments for withdrawing partners. Note: The legal issues in this case vary by state law. …
Over the years, we have found that many firms confuse terms for internal partner buyout plans with those commonly seen in external firm sales. Both transactions are vehicles for transferring CPA firm ownership, but there the similarity ends. The biggest problem with lumping the two together is that in designing a buyout plan, firms mistakenly…
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