Public . Ac~o':!ntmg For women looking to become partner, the survey shows that on average, regardless of whether they are in an IPA 100 firm or a smaller firm, five out of six owners are male, and that number hasn't changed dramatically over the years. Ratio Of Equity Partners To Non-Equity Partners Today, 59% of survey participants indicate that they have at least one non-equity partner in the firm. As the number of non-equity partner positions continues to grow, firms are beginning to ask, "What is the right ratio of equity to non-equity partners?" As you would expect, answers vary widely. Below we show the breakdown in different sized firms. Percentages represent the proportion of all firms in the given revenue band who report various ratios. R ev enue Outside Of "D ollars Times Hours" "Dollars times hours" has been the dominant formula governing the accounting profession since its inception. But as firms continue to evolve, a small but growing percentage of their revenue is coming from something other than hours. Whether it is success fees, commissions, percentage of assets under management, or retainers, non-traditional sources of revenue for accounting firms continue to grow. An average of 8.4% of total revenues is derived from something other than charge hours among the 42% of firms that have some form of an alternative revenue model. This figure represents revenues viii
\c:J Public · !'" Ac~ounting of $385 million, with one-third of that coming from just five IPA 100 firms that have found strong revenue-generating alternatives to the standard revenue model. Equity Ownership Increasing Among Non-CPAs As professional business management positions proliferate across the profession, firms continue to find ways to incentivize those (traditionally) non-CPA professionals. Non-equity partner positions have existed for this group for some time, but we are seeing a growing number of firms offering equity partner positions to these non-CPA professionals in the firm. One-quarter of all firms indicate their partner agreements allow for non-CPAs to become equity owners in their firm, and five out of six of those firms currently have at least one non-CPA equity owner. Who Allows For Equity Ownership among Non-CPAs? 66% ... of IPA 100 29% ... of IPA 200 12% ... of $5 million to $14 million 4%···of < $5 million The Moister Formula For a number of years, IPA has turned to the model of professional services management consultant David Maister to dissect net income per equity partner (NIPEP) into its component pieces to help firms get a better understanding of the various factors that can influence partner income. Every firm should know their Maister Model numbers, and should track them regularly. We start with the equation: NIPEP = Professional Staff x Total Eq. Partners Total Charge Hours x Total Prof. Staff Gross Revenue x Net Revenue x Total Chg. Hrs. Gross Revenue Which provides the following individual measurement of NIPEP: Leverage x Utilization x Billing Rate x Realization x Margin Net Income Net Revenue Shown on the following page are comparative metrics for each quartile (based on net income per equity partner) of
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- Fall '15
- Revenue, partner, CPA firms