INSIDE Public Accounting (IPA), the leader in data collection for the public accounting profession, has released its annual rankings and analysis of the nation’s largest accounting firms, which are growing quickly despite an unprecedented labor shortage and rapidly rising costs.
The data was drawn from 600 firm responses to the annual IPA Practice Management Survey, with a 92% return rate, and form a comprehensive picture of the state of the public accounting profession.
“The labor shortage is a major driver behind the behavior of the IPA 100 firms,” says Charles Hylan, managing director at The Growth Partnership, IPA’s parent company. “The combination of too few professionals and high demand is pushing firm leaders to merge up, outsource tax work and hire non-CPAs, among other strategies. They seem to be working so far, as firms are growing fast and producing impressive financial results. The question now is whether year-over-year growth of 18% will continue next year.”
Now in its 33rd year, the IPA 100 ranking includes the Big 4, Deloitte, PwC, Ernst & Young and KPMG, which collectively generated more than $84 billion in U.S. revenue, and 96 national, regional and local firms. These range from Chicago-based RSM US ($3.7 billion) at No. 5, and Wayne, Pa.-based Global Tax Management ($48.8 million) at No. 100. The non-Big 4 firms make up a total of $34.5 billion in net revenue and 129,110 staff.
The IPA 100: Key Highlights of America’s 100 Largest Firms (Excluding the Big 4)
- Total growth is up 18.1% compared with 15.6% last year, while net income grew by 12.2%, significantly down from 20.7% last year.
- The IPA 100 firms reported 110 acquisitions, totaling $1.25 billion in revenue, more than 7,500 staff and 682 partners.
- Fifteen firms now report $1 billion-plus in net revenue, compared with 12 last year. Sixty-three firms reported revenue of $100 million, up from the 56 firms above that threshold last year.
- Personnel costs as a percentage of revenue are up from 51.0% last year to 52.6% this year.
- Professional staff turnover (CPAs and other client-serving staff) is slightly down from last year at 16.3% versus 18.7%.
- Nearly 56% of professional staff do not have a CPA license comparison to 52.6% last year. Additionally, 10.9% of equity partners are not CPAs, up slightly from 10.3% last year.
Rankings of the IPA 100 Firms
Five firms debuted on the IPA Top 100 list this year: Chicago-based Miller Cooper & Co. Ltd. at No. 57; Los Angeles-based GHJ at No. 90; Winchester, Va.-based YHB at No. 98; Lexington, Ky.-based Dean Dorton Allen Ford at No. 99; and Wayne, Pa.-based Global Tax Management Inc. at No. 100.
The IPA 200, 300, 400 and 500 Firms
IPA also ranks and provides key data on the IPA Top 500, which ranks firms from No. 101 ($47.0 million) to No. 500 ($4.6 million). Access the full rankings.
In-Depth Financial and Operational Benchmarking of the Public Accounting Profession
The full analysis of the IPA 100 through IPA 500 will be published in September in IPA’s annual Practice Management Report, available for purchase now. Because the Big 4 make up 71% of the total revenue of this year’s IPA 100, IPA excludes those metrics in its in-depth analysis to provide all other accounting firms with meaningful comparative practice management data. The September issue of IPA’s subscription-based monthly publication includes the annual list of the IPA Best of the Best firms and IPA’s Fastest-Growing Firms across the nation.
To interview the principals at INSIDE Public Accounting, please contact Christina Camara at 401-595-7144 or [email protected].
About INSIDE Public Accounting
INSIDE Public Accounting (IPA) is a leader in practice management resources for the public accounting profession. IPA offers a monthly practice management publication and four national practice management benchmarking reports every year. IPA has helped firms across North America grow and thrive since 1987.
For copies of the 2023 IPA firm rankings, customized reprints and pricing information, please contact Chelsea Summers at 314-447-2350 or [email protected].