Chicago-based IPA 100 firm BDO USA LLP (FY22 net revenue of $2.5 billion) will become a corporation July 1, dropping its current partnership structure.
The legal name will change from BDO USA LLP, a Delaware limited liability partnership, to BDO USA PA, a Delaware professional service corporation, the firm said in a statement. “This conversion offers tax and other advantages to position our firm for ongoing success as we continue to grow and transform.”
What carried the day for BDO, says consultant Allan Koltin, was a combination of tax benefits and simplification, which he calls “forward-thinking firm and progressive in thought.”
“I had two top-25 CPA firms call this week and they both said what a great idea this was and talked about the tax filing challenges within all the states as well as how complex things have become,” Koltin says. “Another benefit for BDO is moving away from the double taxation at the partnership level and now having principals (versus partners) and receiving a W-2 going forward. It will also be a whole lot simpler going forward for BDO than what historically they had to deal with.”
While changing to a corporation makes it easier to attract investment capital, Koltin says BDO is not seeking a private equity deal. “Like most top-25 CPA firms in the country, they listened to a handful of PE firms that reached out but concluded it’s not for them.”
In addition to lowering taxes on earnings, a new structure could speed decision-making, as moves can be made without the full partnership weighing in, observers say.