CPA firms expect growing demand as U.S. economy strengthens and baby boomers sell their businesses
By Mark Green
Kentucky accounting firms expect growing demand for their services in 2015. Multiple respondents to The Lane Report’s annual economic outlook survey said they especially see increased mergers and acquisitions to provide growth for their firms. This is partly because a strengthening U.S. economy means sales prices have gotten better, but primarily they foresee M&A growth due to the baby boomer generation’s shift into retirement age – that generation’s business owners are focusing on succession and estate planning.
It’s a trend that extends to the accounting services field itself, whose owners are among those retiring. Tax policy changes and the ongoing unfurling health insurance reforms and regulations are generating demand for guidance by CPA firms. Others report they see increasing numbers of clients planning to invest so they can take advantage of business opportunities presented by the improving U.S. economy.
“We anticipate our firm to grow and expand during 2015 as we respond and adapt to our clients’ needs. Legislation is constantly changing the rules of the game. Especially in areas of tax and health insurance, our clients increasingly look to us for guidance and advice rather than just compliance. Implementing tax reduction strategies and guiding clients in regard to succession planning and estate planning will be areas of high demand in 2015. We also have seen increased requests to assist new business owners with many of the financial tasks associated with operating a business.”
“2015 should show growth for the accounting sector. During 2014 we started seeing more ‘special project’ type work coming back; this is a good indicator the business community is making plans and thinking more economic growth is on the way. With the economy showing some strength and the number of baby boomers starting consideration of their exit from their businesses, it is causing firms to have more planning work than in the past. The “boomer” factor is changing the demographics in all areas of the economy and especially in the public accounting world. Accounting firms are expected to have an unprecedented year in merger and acquisition activity as more firm owners are looking for their own retirement plan. The industry is changing every year due to this activity. The industry is seeing more and more large firms continue to merge as well as smaller firms.”
“The stock market continues to perform well, oil prices are low and unemployment on the decline. Although the rest of the world is seeing its share of struggles, the U.S. economy continues to strengthen. As such, we anticipate steady revenue increases will continue for accounting services in 2015. Our firm is seeing increasing opportunities to provide consulting services to clients above and beyond typical compliance work, and we continue to focus on expanding and strengthening the services we provide on niche-specific levels. The merger and acquisition market for CPA firms continues to be robust. For our clients, last-minute tax legislation, new regulations and Obamacare will continue to provide challenges as we enter the 2014 tax filing season. Overall, I am excited about the current growth opportunities for our firm and our clients.”
“We will continue to see relative strength and improving conditions, however, the environment remains extremely competitive. Our clients are guardedly optimistic about 2015, and many will be evaluating investments in areas that will help them compete more effectively and efficiently. Here in Kentucky, the Affordable Care Act and the expansion of Medicaid has benefited most hospitals and may slow that sector’s merger-and-acquisition trend in the short term. In the commercial markets with transaction price multiples remaining at recent highs, many middle market and family-owned companies will evaluate if now is the right time to sell the business.”
“As baby boomers look toward retirement, many family businesses and professional firms are struggling to find graceful ways to exit. A recent American Institute of CPAs survey showed 45 percent of U.S. CPA firms are currently in negotiations for merger, acquisition or sale – and another report from Altman Weil Inc. cites nearly 40 percent of attorneys are beginning to retire. These concerns are affecting many other types of family-owned businesses. The consolidation of local businesses and the retirement of business and community leaders will surely change the professional landscape in the coming years.”
“As the national and local economies continue to grow, so does Crowe. Although the accounting industry is consolidating, Crowe has continued to grow through strategic U.S. acquisitions and local market expansion. What we’re seeing in Kentucky is expanded investment, growth and recovery. As investment and growth are ongoing, our focus is to provide high-value services in the accounting, tax, consulting and technology areas. This enables our clients to achieve their goals, while we continually improve our client experience for recurring needs.”
“In 2015, Kentucky’s economy will continue to be constrained by our current tax structure and a lack of willingness to look at the changes necessary to bolster business in the state, including passing right-to-work laws and revised gaming legislation. If legislators pass LIFT to move toward possible local-option sales taxes, or similarly progressive laws, and reverse our tax on distilled spirits, we may be able to partially mitigate other areas of inaction. A shortage of skilled labor in Kentucky is a persistent concern. The commonwealth must do something to reverse the “brain drain” and keep our best and brightest here at home.” ■