Merger and acquisition activity has surged in the accounting sector, while financial advisory practices were holding out, hoping their businesses would return to pre-global financial crisis and Future of Financial Advice values.
Connect Financial Services Brokers chief executive, Paul Tynan, said financial advisory practices were experiencing ‘valuation shock', but must follow their accountant counterparts and start thinking about restructuring options to make the most of the post-FOFA world.
He said his organisation had seen a big jump in merger and acquisition activity within accounting, with many practice principals reviewing their business and succession plans.
Tynan said succession planning had become a ‘red hot' topic as the huge group of baby boomer accountants moved into retirement.
"With the expected wave of baby boomer accountants to exit their businesses and retire — together with new structural and operational pressures — many are taking steps now to restructure, streamline processes, source new income streams, utilise resources more effectively, optimise values, identify potential successors, etc. and hence the increase in enquiries received by Connect," he said.
One person accounting firms were particularly under pressure after the Australian Taxation Office removed individual income tax returns, which resulted in reduced compliance work, and affected revenues for accountants.
The big four accounting firms were looking at mid-sized firms for growth and revenue opportunities, and as a result, accountants were cutting jobs and looking at automation and outsourcing to curtail costs.
Whereas a partner in small accounting firms would look to offer partnerships to a member of the team in the past, this was no longer the case today as new entrants were hesitant to enter into a partnership, Tynan said.