The Platt Group, publishers of INSIDE Public Accounting (IPA), has released the twenty-second annual report on the nation's largest 100 accounting firms. The report offers a snapshot of the financial and operational health of the largest firms, reflecting the "state of the union" of the accounting profession. More than 400 firms completed the annual survey.
"Growth through mergers has dominated the headlines for the IPA 100 firms in the past year," says Kelly Platt, publisher of IPA. "But we see organic growth making a comeback as firms continue to expand and deepen their service areas and specialty practices."
After a down year in 2010, the Big 4 came back in 2011 with an overall growth rate of 8.7 percent, adding $2.7 billion to the top line. The Big 4 collectively accounted for $33.644 billion in revenues. Total revenue of the IPA 100 grew to $46.024 billion, up from $42.672 billion last year, or an increase of 7.8 percent. The Big 4 accounted for 73 percent of the revenue base among the IPA 100. As an aggregate group, the other 96 firms added $668 million in revenue to the top line, accounting for $12.380 billion in revenues, up 5.7 percent from both mergers and organic growth.
Key metrics among the 2012 IPA 100 include:
- Average revenue growth (excluding mergers): 5.6 percent.
- Average net income growth (highest since 2008): 7 percent.
- Average staff turnover: 14.9 percent.
- Average margin (net income as a percentage of net revenue) (highest since 2008): 29.9 percent.
- Average pay for professional staff (up 2.7 percent from last year): $81,062.
- Average partner billing rate (up 2.2 percent from last year): $376.
- Average equity partner compensation (up $34,000 from last year): $555,793.
"IPA 100 firms reported organic growth rates of 5.6 percent on average - not the double-digits of the go-go years of the early 2000s - but clearly an indication that we're moving away from the sluggish growth of 2009 and 2010," says Platt. "We saw only six of the IPA 100 lose ground last year, compared with forty firms in negative growth territory last year. That's a sure sign that things are picking up and an indicator of the strength of the profession's ability to rebound from tough times."
Strong profit margins west of the Mississippi continue to be the dominant story separating the performance of IPA 100 firms across the country. With net income as a percentage of net revenues (profit margin) averaging 35.5 percent across the Great Plains and 34.6 percent across the West, income opportunities are significantly greater for these firms than their counterparts in the Great Lakes (30.2 percent), in the Northeast (27.6 percent), and in the Southeast (26.7 percent).
On average, IPA 100 firms derive 21.6 percent of their revenues from "nontraditional" services - everything except audit and tax work. These areas include litigation support, computer consulting, wealth management, and health care consulting, to name a few.
the complete list of 2012 IPA 100 firms.