Predictions and Trends for 2024 — Accountants Advisory Group

Predictions and Trends for 2024

by Joe Tarasco

The future will bring tremendous opportunities for accounting firms that are highly leveraged, with well-trained professional staff, using state-of-the-art technology and outsourcing methods and processes, and increased efficiency methods.

In 2024 and beyond, CPA firm leaders should focus on planning for diverse options based on as many scenarios as possible. This type of planning explores plausible potential business models and implementation processes for impending knowns and unknowns. Smaller public accounting firms will have no choice but to structure and manage their firms like a corporate business and less like a traditional practice. This is especially true if they wish to remain independent and implement an internal succession plan.

As you develop your strategic plan for 2024 and beyond, consider the following predictions and trends:

Staffing

As the war for talent is still in a “crisis mode,” firms will invest more resources into outsourcing work offshore and acquiring firms or growing their existing firms in India and the Philippines and other countries. In the next five years, progressive and growth-oriented firms will outsource at least 20% of their chargeable time.
More CPA firms will institute an Employee Stock Ownership Plan (ESOP) and succession strategy to boost recruitment, retention and allow for non-CPA ownership and preservation of founder legacy and firm culture.
As succession planning continues to be challenging, career development and leadership training will further expand into firm CPE curriculums. Progressive firms will significantly increase their staff performance management, mentoring and counselling. To remain competitive and avoid merging into a larger firm, partners will have no choice but to invest heavily in their best and brightest staff in all stages of their careers.
Public accounting firms will increase their efforts to recruit talented partners from other firms. Ideal targets will have leadership and practice development skills and partners who are experts in industries and niches.
Diversity, equity, and inclusion (DEI) initiatives will continue to be a competitive differentiation, especially in attracting talented professionals.
More accounting firms will follow the Big 4 and build their knowledge of generative AI and assess the opportunities and the risks of implementing the transformative technology into their practices.
To compete for talented professionals, accounting firms will continue to offer remote work options for partners and staff throughout 2024 and way beyond.
CPA firms will promote staff to partner ranks quicker than in the past as a retention strategy.

Mergers & Acquisitions and Private Equity

Across the country, consolidation of firms will continue at a faster pace for accounting firms of all sizes. 2024 will break records for CPA firm M&A and Private Equity transactions. We will see more private equity (PE) transactions with Top 150 firms and tuck-ins in 2024.
There will be more partially leveraged and hybrid-traditional deals with buyers and sellers not interested in the PE structure or those that do not meet PE criteria.
CPA firms will merge as a competitive strategy to gain more resources, greater service capabilities, industry expertise, and advisory services rather than for near term succession problems. There will be more mergers of mega-firms into larger regional and national firms. We will also see more mergers of east and west coast firms and regional to regional to expand geographically and strategically.
The accounting firms that have grown through the consolidation of aging partners and practices will begin to address intensified succession planning issues. Firms with succession challenges that wait too long to merge or be acquired will experience significant decreases in practice valuations.
Smaller CPA firms will split up due to lack of partner consensus on succession planning, whether to merge into a larger firm, and the strategic direction of the firm.

There will be more mergers of public accounting associations and networks.

Marketing and Growth

The need for diversified multi-faceted, and contemporary marketing professionals will become even more necessary to maintain a competitive edge in the local marketplace.

More CPA firms below the Top 200 will outsource their marketing, practice development, and lead generation programs to consulting companies.

As businesses expand globally firms will need to better understand international accounting and tax regulations, as well as the complexities of cross-border transactional reporting.
As the lack of qualified accounting, tax, and advisory professionals continues to be an obstacle to growth, the role of internal marketing professionals and external consultants will continue to expand. Their roles will increase in the areas of recruiting to attract quality staff, partners, and M&A candidates.
As routine A&A tasks become more automated firms of all sizes will be expected to shift towards providing more advisory services.
Rapidly changing technology will play an even more significant role in marketing professionals’ programs and plans.
As a result of the above, marketers will be better equipped to generate sophisticated ROI-driven reports, perform precise market research, collaborate with BD professionals, target prospective clients, implement digital marketing and social media campaigns, and use videos and creative designs to illustrate case studies and testimonials.
CPA firms will become even more selective about which new clients they accept and will be more willing to decline undesirable new business. Firms will continue to increase their minimum fees for tax services and A&A clients. More accounting firms will clearly define their target clients based on maximizing revenues, resources, and specialties, and develop a strategy to market their services to specific desirable prospects.
More accounting firms will adopt a long-term, continuous marketing strategy to focus on quality clients and will be more willing to terminate relationships with ‘C’ and ‘D’ clients. As we have published, marketing for quality, not quantity, may be one of the most important business decisions your firm will make to add value to your practice and ensure the firm’s long-term success.

Management

The traditional partnership structure will continue to fade away and will be replaced by a more corporate type of structure. More CPA firms will hire professional Chief Operating Officers to assist the partners in managing their organizations.
Managing Partners and Executive Committee members will be held more accountable by their partners for strategic actions and profitability. Attention will focus on their ability to lead and manage successfully and achieve the goals and objectives, as documented in the firm’s strategic plans. Firm leaders will be more inclined to develop and implement strategic plans that they will be held accountable to achieve. There is a growing demand for sustainability and environmental, social and governance (ESG) reporting. Firms will need to develop expertise on measuring and reporting on sustainability measures, as clients face increasing pressure to disclose their ESG efforts.
To take full advantage of the favorable marketplace for accounting firm services, partners need to be accountable and take on the roles of highly effective client relationship managers, trusted advisors, and rainmakers — not grinders. Staff want to work for contemporary leaders and need positive role models.
CPA firms of all sizes will increase their menu of consulting and advising services to remain competitive.
Accounting firms will continue to acquire consulting and advisory companies that complement their traditional services.
Unrelenting increased competition for professional staff, rising staff labor costs, increased regulations, and client demands will force CPA firms to carefully examine their mix of services, industry concentrations, and niches.
Client engagement profitability will be more scrutinized and evaluated, and partners will be held more accountable for increased realizations and other KPIs.

The future is bright for accounting firms that can quickly implement initiatives and strategies to adapt to the changing marketplace and the needs of quality clients.

Joe Tarasco, CEO and Senior Consultant, Accountants Advisory Group, LLC, assists the leaders of public accounting firms by consulting in all areas of firm practice management, including succession and strategic planning, firm governance, mergers and acquisitions, partner compensation structure, practice development, facilitating partner retreats, and leadership consulting. Click to request a consultation or call (845) 265-9046.