The Platt Group, publisher of INSIDE Public Accounting (IPA), recently released its 20th annual report on the nation’s Top 100 accounting firms.
“A major finding in the IPA Top 100 report is the average growth rate for the nation’s largest accounting firms was -0.4 percent, the first time we’ve seen a contraction in 20 years,” said Kelly Platt, co-publisher of the report.
Of unique interest this year is the continued ability of the IPA Top 100 to adapt to recessionary pressures. “Tighten the belt!” was the battle cry for most firms, according to the report's authors. But, beyond that, strategies were as varied as the firms that pursued them.
How did they preserve partner compensation? Scale back or get rid of unproductive owners, as 16 percent reported. How did they shore up the bottom line? Reduce staff, as 60 percent reported, or close some offices, as 18 percent reported. How did they demonstrate leadership and protect the staff? Require partners to take pay cuts while keeping staff pay neutral, according to 35 percent of firms reporting. How did they remain independent and grow? Merge in smaller firms, as 20 percent reported.
Layoffs and downsizing have reduced the IPA Top 100 work force by approximately 2 percent with total staff down nearly 4,100 from last year, according to the report.
“After belt-tightening, thinning out less productive staff and partners, and making the proper integration of systems and processes from mergers over the past few years, firms are poised for a quick recovery,” said Michael Platt, co-publisher of the report. “Having learned the hard lessons of the Great Recession, IPA Top 100 firms are better prepared for the future and are eagerly awaiting the turnaround to a stronger world economy.”
Even though growth rates for the group are down, 41 percent show an increase in revenue over last year, and five of the IPA Top 100 grew by more than 10 percent, despite the economic downturn.
One of the stunning success stories among the IPA Top 100 is Alexandria, VA-based Kearney & Company, which continues to shoot up the chart. The firm debuted on the list two years ago at No. 97 and landed this year at No. 38 with a growth rate of 38.7 percent.
The top six accounting firms by net revenue remain unchanged from last year: Deloitte LLP, Ernst & Young LLP, PricewaterhouseCoopers LLP, KPMG LLP, RSM McGladrey Inc. and McGladrey & Pullen LLP, and Grant Thornton LLP. CBIZ Inc. & Mayer Hoffman McCann PC supplanted BDO USA LLP in the seventh spot, and Crowe Horwath LLP and BKD LLP rounded out the top 10.
Some key metrics to consider among the INSIDE Public Accounting Top 100:
- -0.4% Average revenue growth (excluding mergers)
- 13.8% Average staff turnover
- $79,103 Average pay for professional staff (down 1 percent from last year)
- $368 Average partner billing rate
- $537,253 Average equity partner compensation (down approximately $50,000 from the peak two years ago)