{"id":64292,"date":"2025-02-02T12:20:01","date_gmt":"2025-02-02T12:20:01","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/how-sikich-is-transforming-the-accounting-firm-model-and-putting-employees-first\/"},"modified":"2025-02-02T12:20:01","modified_gmt":"2025-02-02T12:20:01","slug":"how-sikich-is-transforming-the-accounting-firm-model-and-putting-employees-first","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=64292","title":{"rendered":"How Sikich Is Transforming the Accounting Firm Model \u2013 And Putting Employees First"},"content":{"rendered":"


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\n CFO Ryan Spohn reveals how Sikich’s $250M PE deal revolutionized employee ownership.<\/span>\n <\/p>\n<\/p><\/div>\n

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\n Private equity is flowing into CPA firms at a record pace. That\u2019s great for partners, but what does it mean for everyone else?<\/span>\n <\/p>\n<\/p><\/div>\n

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\n To find out, I spoke with <\/span>Ryan Spohn<\/span>, CFO of <\/span>Sikich<\/span>, a professional services firm headquartered in Chicago. Sikich ranks 27th on Accounting Today\u2019s Top 100, employs more than 1,900 people worldwide, and posts $364 million in annual revenue.\u00a0<\/span>\n <\/p>\n<\/p><\/div>\n

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\n Ryan told me how Sikich departed from the traditional partnership model, opening the door to outside investment, expanding employee ownership, and creating a culture where wellness and flexibility matter as much as the bottom line.<\/span>\n <\/p>\n<\/p><\/div>\n

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Why the Traditional Partnership Model Is Losing Appeal<\/span><\/h3>\n<\/p>\n

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\n Many CPA firms are still structured as partnerships, with <\/span>all the profits distributed<\/span> among the partners each year. Unfortunately, this model often leaves little to no funds for investing in new technology, acquiring other companies, or hiring new talent.<\/span>\n <\/p>\n<\/p><\/div>\n

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\n \u201cFirms pass the hat around to fund any major initiative,\u201d Ryan told me. \u201cIf someone is close to retirement, they may not see a reason to reinvest in the business. That becomes a big obstacle for growth and innovation.\u201d<\/span>\n <\/p>\n<\/p><\/div>\n

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Alternative Practice Structure: Splitting Assurance from Advisory<\/span><\/h3>\n<\/p>\n

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\n Sikich addressed these challenges by implementing an <\/span>alternative practice structure<\/span>. This arrangement separates the firm’s attestation work, conducted under <\/span>Sikich CPA<\/span>, from its consulting and advisory services offered through <\/span>Sikich LLC<\/span>. The CPA side complies with state ownership regulations, while Sikich LLC can secure outside funding.<\/span>\n <\/p>\n<\/p><\/div>\n

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\n \u201cAn alternative practice structure solves the financing problem for CPA firms,\u201d Ryan said. \u201cIt lets us bring in outside capital for our consulting and advisory lines without the usual regulatory hurdles on the assurance side.\u201d<\/span>\n <\/p>\n<\/p><\/div>\n

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$250 Million from Bain\u2014But Retaining Control<\/span><\/h3>\n<\/p>\n

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\n With its new structure, Sikich secured a <\/span>$250 million minority investment <\/span>from Bain Capital\u2019s Special Situations Group. Unlike some private equity deals that grant majority control to investors, Sikich maintained control.<\/span>\n <\/p>\n<\/p><\/div>\n

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\n \u201cA majority investment was a nonstarter,\u201d Ryan explained. \u201cWe want this to be a place where people can build long-term careers, and we need to preserve our culture and client relationships.\u201d<\/span>\n <\/p>\n<\/p><\/div>\n

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\n The result? Sikich has the cash to <\/span>\u201c<\/span>supercharge<\/span>\u201d<\/span> growth, including larger acquisitions, tech investments, and employee development. They\u2019ve averaged 20% annual growth over the past five years and aim to accelerate.<\/span>\n <\/p>\n<\/p><\/div>\n

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Expanding Equity from 5% to 30%<\/span><\/h3>\n<\/p>\n

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\n One of the boldest moves was expanding equity ownership in the firm. Traditionally, only partners who made a sizable buy-in received a share, often waiting decades for any payout. Sikich changed that approach.<\/span>\n <\/p>\n<\/p><\/div>\n

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\n \u201cBefore, maybe 5% of employees were partners with K-1s,\u201d Ryan said. \u201cWe eliminated the complex buy-in, automated the reinvestment of net income into the firm, and now around 30% of our people have units. There\u2019s also a discretionary bucket for rising stars. It\u2019s a big shift in how we reward and retain top talent.\u201d<\/span>\n <\/p>\n<\/p><\/div>\n

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\n Since the firm operates outside a strict partnership model, employees don\u2019t struggle with K-1 distributions. They also aren\u2019t required to borrow money to gain ownership\u2014equity is granted based on performance and potential.<\/span>\n <\/p>\n<\/p><\/div>\n

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Putting People First: Wellness and Work-Life Integration<\/span><\/h3>\n<\/p>\n

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\n Sikich\u2019s equity strategy is just one piece of its employee-first philosophy. The firm also invests heavily in <\/span>mental health<\/span>, <\/span>flexible schedules<\/span>, and a <\/span>results-driven<\/span> environment:<\/span>\n <\/p>\n<\/p><\/div>\n

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