Managing Partners: What’s Keeping You Up at Night?

The CPA industry’s most active consultants formed The New Horizons Group 15 years ago to share ideas and experiences. The following nuggets from a recent meeting are intended to help managing partners address issues facing their firms.

Mergers. Tips for merging two sizable firms together: (1) You really need a process; make sure each meeting is documented throughout; (2) Co-CEO concept doesn’t work; (3) For Exec Committee, initially designate seats by firm and after a few years, elect whoever gets the votes; (4) The implementation cycle always takes longer than you think.

Record numbers of firms are merging, but what if your firm has little or no experience in this area? CPA Firm Mergers: Your Complete Guide explains how to identify merger candidates, what data to review, what questions to ask and how to do your due diligence.

Partner retirement. There is an increasing trend toward directly linking notice and proactive client transition to receiving deferred comp payments. The only reason a retiring partner gets deferred comp payments is to retain clients. Retention of a retiring partner’s clients is in jeopardy without proper notice and client transition efforts.

Whether your firm needs to update an existing agreement or is just now crafting its first-ever plan, CPA Firm Partner Retirement/Buyout Plans is a comprehensive guide to creating a properly written, industry-competitive agreement.

Management. At a recent conference, firms rated themselves on how well they do at marketing. The average response was a miserable 3.5 on a 10-point scale. Many firms don’t aim higher because they don’t want to pressure their partners to market.

CPA Firm Management & Governance discusses firm marketing efforts as well as teaches firms how to adopt the ideal governance structure for its size.

Hourly pricing/value billing. Proponents of value-billing defend this policy as follows: measuring hours put value in the time instead of the value of the services;
(2) time sheets and hours are measures from Satan. Opponents say (1) the need for cost accounting information always justifies recording hours and (2) hourly pricing reduces the risk of losing money on a project. The reality is that almost no firms have switched to value-billing and discontinued the use of timesheets.
Why choose between one or the other. Do both!

In working with nearly 1,000 firms over the past 20 years we’ve learned What Really Makes CPA Firms Profitable – so we’ve incorporated Best Practices from our consulting experiences into our popular monograph on profitability.

Staff issues. HR personnel are spending 80% of their time on 20% of the people who have troubles. Instead, they should spend 80% on the better people. Staff should understand what drives the profitability of the firm.

Staff should understand how CPA firms work, where they fit in and what the secrets are to advancing. How CPA Firms Work: The Business of Public Accounting was written for firms to give copies to their new staff as part of their on-boarding process.