5 steps for evaluating whether to become a partner

Partnership has long been seen as the pot of gold at the end of the rainbow in public accounting — the payoff for all the dedication and determination CPAs put in on their way to the top.

But the path to partnership is a journey. There are forks in the road, signs that must be read, roadblocks and detours that must be negotiated. Navigating the journey can be overwhelming, but having a clear vision for yourself can help you see the direction you should take.

So, how can accountants determine if the partner track they are on is right for them? This article offers five nuggets of advice from three CPAs, two who recently made partner and one still striving to achieve that goal.

GAIN AN UNDERSTANDING OF WHAT IT MEANS TO BE PARTNER

CPAs considering a partnership position need to fully understand how things will shift for them in a partner role as well as the financial risks involved when seeking an equity role in which they own a piece of the business.

There’s a lot to consider. How much? Enough that the recently revised Emerging Partners Toolkit from the AICPA & CIMA Private Companies Practice Section (PCPS) contains nine sections of information and an additional six documents with detailed questionnaires and worksheets designed to help potential partners determine if a partnership role is right for them — and whether they are right for partnership. While the toolkit alludes to non-equity partners, its focus is on helping CPAs understand the roles, responsibilities, and risks of becoming an owner in an accounting firm.

Christine Stolzenburg, CPA, an audit senior manager at Freed Maxick CPAs in Buffalo, N.Y., spent a great deal of time asking questions and evaluating the opportunities — and risks — of pursuing an equity partnership at the accounting firm where she has spent her entire career. This meant evaluating if she was aligned with the firm’s values and the way it operates.

“One of the biggest challenges is really changing your mindset to that of a business owner rather than an employee,” Stolzenburg said. “You have a lot on the line not only financially, but your responsibility for both clients and employees increases drastically.”

Eugene Park, CPA, now a consulting partner at Arizona-based firm Heinfeld, Meech & Co., P.C., agreed that aspiring partners should take a hard look and evaluate whether their current firm is the right place for them in an ownership role.

“If the firm isn’t for you, try to find someplace where you can be yourself,” he said.

In Stolzenburg’s case, she gathered key information from attending a “Path to Partner” presentation her current firm leadership developed. The presentation provided transparency and details about the nitty-gritty aspects of being a partner at Freed Maxick CPAs, including key traits the firm is looking for in future partners, and the financial risks of pursuing an equity partnership track.

“It was really helpful to see behind the scenes of ‘here are some of the rewards, but here are some of the risks as well,’” said Stolzenburg, who credited the course with solidifying her intentions to pursue partnership at her firm.

TRUST THE PROCESS — AND YOUR GUT

Park admits he was a bit restless to climb the career ladder at the start of his career. He now wishes he had put less pressure on himself and had been more trusting that advancement would come with his steady success.

Park also realized that, while he had been successful as a partner in audit, he wanted to try the consulting side of the business. By trusting his gut and making the switch, he found it was a better fit.

“I realigned my purpose, and realized I was making an impact regardless of my title,” Park said.

His advice to others: “Be patient. It’s a career, not a sprint.”

MAKE A MARK

Park also suggested CPAs carve out a lane for themselves when building their career. For him, that meant taking on challenging work that some of his cohorts avoided.

He was able to embrace that work, and it helped differentiate him as a value to the firm.

“If you’re the go-to person, it sets you apart,” he said.

CPAs can also stand out in other ways, such as becoming specialists in an industry niche or building a personal brand through social media and blog posts that establish them as a subject matter expert in their field. A key question for potential partners: What do you do well that no one else brings to the table?

KNOW YOUR WORTH

When you are approaching the switch to become a partner, be clear about what your expectations are for the role, in responsibilities and in compensation.

That advice came from Kendra LaFleur, CPA, who hadn’t even strongly considered a partner role until one of her mentors at Atlanta’s Carr, Riggs & Ingram said he would like to see her in the firm’s leadership one day.

“It just planted a seed,” said LaFleur, who made partner in early 2023. “I felt empowered after someone saw the potential in myself that I didn’t see at the time.”

By talking with mentors ahead of time, LaFleur was able to clearly identify her skills and talents and relay that, as a partner, she wanted to be involved with people management at her firm. She researched compensation, put out a salary number during negotiations for her partnership role, and asked what it would take for her to get to that level.

“I knew it wasn’t unreasonable and was in the range,” LaFleur said.

SPEAK UP ABOUT WHAT YOU NEED

It’s important to clearly state your partnership aspirations to mentors and supervisors so that they are aware of your professional goals, Park said. He had signaled his intentions in his firm, and subsequently found support to make the jump to partner as firm leaders saw that he was interested and consistently putting in the hard work to take on that role.

Park was told, “Keep doing what you’re doing. You’re going to get there, you’re on the path.”

LaFleur, too, made it a point to be open about her goals. She came into management at a time when she had young children. She was able to have frank conversations with her mentors and supervisors about the flexibility she needed to create a path to partner for her that also respected her family’s needs.

For her, it was worth coming into the office before the sun was up, if she knew she could take off to make her child’s baseball game.

“You have to use your voice,” LaFleur said. “I was able to make it to partner because I was able to say, ‘Why can’t it be done this way?’”

A FIVE-STEP PROCESS

CPAs evaluating potential partnership opportunities have much to learn about the position and the process. Section 1 of the Emerging Partners Toolkit suggests a five-step pathway. Following is a brief synopsis.

Step one — Understand what it means to be a partner/owner

CPAs may be well suited for a partnership position if they wish to be a master of their own fate and accept that to make more than a salary, they must be willing to accept risk. Potential partners should ask themselves honestly if they have a vision for the future that they want to create via a leadership position with a collaborative team of motivated professionals.

It’s important to remember that partnership is an opportunity, not an obligation. If a CPA is uncomfortable with the risks and responsibilities, they should stop the process and reassess.

Step two — Understand the financial aspects of firm ownership

CPAs assessing an equity partnership position must remember they are buying a stake in an accounting firm. Existing owners will be selling some of their interest.

Before investing in the firm, CPAs should understand:

• How the firm’s value is calculated.
• How the buy-in takes place and is financed.
• How partner compensation is determined (e.g., “eat what you kill” or shared-revenue model).
• What the partner benefits are for senior partners and for new partners.

Step three — Redefine your role in the firm and set developmental goals

It is imperative that CPAs understand what their responsibilities will be as a partner. If business development is expected, how much revenue will they be required to generate and in what time frame?

Will any training be provided to help develop the skills needed to build a book of business?

It’s also important for potential partners to address the following questions:

• What roles will they be expected to fulfill now and in the future?
• Are there senior leaders who will be stepping out of any roles?
• What transition plans are necessary to make the new role effective?

Step four — Establish a specific timeline

The firm’s current partners should establish a specific timeline for CPAs to complete the partnership buy-in process. Potential partners should seek one-on-one meetings with senior partners for guidance and feedback. Also, the firm should include potential partners in meetings where they can learn about the issues partners deal with regularly.

Step five — Learn about the legal process of buying in

Acquiring an ownership interest in a CPA firm is a legal transaction. New partners will have to go through numerous documents that detail what is being bought and sold, the terms of the deal, and the price. Other documents should cover the ownership and decision-making structures in the firm, detail certain protections for everyone entering the transaction, and spell out what happens in the case of events such as death, disability, or divorce of an owner.

The five steps help CPAs assess the position they are considering, but there is much more to consider than can be covered in a single article. Potential partners should seek information and advice from as many trusted sources as they can. With the right partnership, CPAs can build great firms and rewarding lives.

About the author

Sarah Ovaska is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.

LEARNING RESOURCES

PCPS Emerging Partners Toolkit

The Emerging Partners Toolkit is designed to guide potential partners through the process of determining whether they are suitable and ready to be an owner in an accounting firm. The toolkit’s questionnaires and worksheets help the CPA not only assess their own strengths and weaknesses but also the business practices, culture and current partners of the firm where they could become an owner.

For more information or to make a purchase, go to aicpa-cima.com/cpe-learning or call 888-777-7077.

AICPA & CIMA RESOURCES

Articles

“Making the Partnership Decision,” JofA, Aug. 1, 2022

“How the Path to Partner Has Widened for Women, Minorities,” JofA, May 26, 2022

“Financial Considerations to Make Before Becoming Partner,” AICPA & CIMA, May 7, 2021

“You Made Partner: Now What?” JofA, April 13, 2015