CPA Trendlines Podcasts Gary Shamis: When It Comes to PE, Young Partners Should Proceed Cautiously | Accounting Influencers
Nov 23, 2024
Gary Shamis, CEO of Winding River Consulting, shares his insights on the impact of private equity in the accounting sector. He discusses how accounting's stable cash flows attract investors but warns of the personal costs for young partners. Shamis highlights the critical talent shortage in the profession and argues that private equity won't provide a quick fix. He also reveals how young and older partners navigate differing motivations, shedding light on the complex dynamics in accounting firm partnerships.
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CBiz Model
- CBiz, a public company, acquired many small CPA firms in the 90s and initially focused on accounting.
- They later shifted to advisory services, which now make up a larger portion of their $1.4 billion valuation.
Private Equity Goals
- Private equity firms aim to increase profitability within a 5-7 year timeframe by enhancing the acquired firm's earnings or increasing its sale multiple.
- Building incremental revenue through advisory practices is crucial for organic growth, but faces challenges like integration time and cross-selling.
Managing Partner Compromises
- Managing partners often lose control under private equity, prioritizing the firm's return on investment above all else.
- This shift can create tension with other partners and demands rapid growth, potentially conflicting with the complexities of managing people and deadlines.