IAB US Country Report (Calvetti Ferguson)

Business Opportunities
April 12, 2022 - Calvetti Ferguson

This article is a contribution to the International Accounting Bulletin (IAB) USA survey by PrimeGlobal member firm Calvetti Ferguson which was published in IAB's March 2022 newsletter. 

Please read the full article below and reach out to Jason Ferguson, Managing Partner at Calvetti Ferguson, regarding any questions in relation to the article and doing business in the USA.

How would you describe the health of the accounting industry in the US in terms of customer demand, fee pressure, and staff recruitment and retention?

Customer demand is really high and there are a lot of clients who are demanding more services and more assistance. When it comes to retention in the accounting industry, it differs by region and level. We’ve noticed that it has become more difficult to retain managers and above and comparable for seniors and staff. Staff recruitment has also been challenging and it has been easier for us to retain and recruit at the manager level, however, there is a shortage of talent. For fee pressure, we haven’t experienced a lot of fee pressure because there has mostly been a higher demand for services from clients. In fact, we have actually increased our rates by 20% over the last 12 months.  

Have the community development and renewable energy markets grown? Are there any other services areas where demand has grown over the last 12 months?

Renewable energy, including ESG, has been talked about, but there is not a lot of substance behind it since it still is not economical to generate renewable energy or store it on a mass level given the current technology available.

As for other services, we’ve seen transaction advisory and accounting services have grown in demand over the last 12 months. Transaction advisory services have grown because there is a lot of capital out there and people are trying to use it, which is creating many transactions. There is a lot of fatigue with entrepreneurs. After facing the pandemic some are ready to divest; therefore, there are many willing sellers and hungry buyers driving the demand for this service.

As for accounting services’ growth, there is a talent shortage, not only for accounting firms but also for companies, which is causing companies to look for a firm to outsource their accounting services.

Why do you think there has been so much consolidation in the accounting industry and do you think that will continue?

The first reason there is so much consolidation is that there are larger and larger firms that have holes in their geographies that they are trying to fill in, including the top 25 firms. Another reason is that many firms have retiring partner challenges, which happens when firms start acquiring other firms and they must take on the partner’s retirement obligations which causes them to reach a fork in the road. Consequently, the firm must decide if they are going to stop their acquisition activities, pay down their retirement obligations, or have constant M&A to get larger and larger, then have a constant retirement obligation, so that is what is driving firm consolidations as well.

I believe this trend is going to continue, but any time there is over consolidation within an industry (which we are heading towards), it always corrects itself, allowing smaller firms to grow rapidly and gain market share. Clients are going to find themselves with huge national and international firms that are not a good fit for them. Ultimately, there will be lots of opportunities for smaller players to grow.

What are your expectations for the next 12 months - are there any potentially significant developments in the pipeline?

Over the next 12 months, we are actively investigating and pursuing opening offices in other markets.

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Calvetti Ferguson

Calvetti Ferguson is a middle-market CPA firm that provides accounting, advisory, assurance, & tax services with an entrepreneurial mind & spirit. We combine the experience and know-how of a Big Four firm with tailored business solutions to provide our clients with the ultimate consulting experience.

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