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road to becoming a partner

A buddy at a big4 and I were talking the other day how much harder it must be to make partner nowadays. Back in the SOX boom, it seemed like the road was a lot easier.

Your friend is absolutely right. It was significantly easier back then (relatively speaking). At the end of the day, it's all about the benjamins. Money was pouring in during the 404 era and so the partners needed morehands on deck to spread the responsibility around, especially since their coffers were being filled with dollars, so there was more money to spread around. The economy was booming, there were more startups, which means more companies needing audits, and thus more $$ coming in. Life was good for the partners. Spread the wealth around, but still have enough money to buy themselves that beach house for the summer.

And then 2008 happened.



Nobody was leaving the firms, which meant a bloated payroll. There were no IPOs. Startups stopped getting financings. Companies started trying to cut costs, and aimed at audit fees. The coffers were emptying fast. The partner promotions decreased significantly since then, since there wasn't enough money to spread around and the current partners needed to maintain the size of their wallets. So the number of senior managers just shot up. There were and still are a glut of people one step below partner. Why are they still there? Some are hanging on to the illusion that there's a 10-20% chance of them becoming partner. Some don't know what else they can do since they don't have the requisite private experience to be a controller, and can't be demoted to an assistant controller position.
And then the last group found that comfort zone. The zone contains the following - a) They don't carry the level of risk on their shoulders that Partners do. b) They make decent money c) They've got managers doing the stressful review work and the senior associates and below doing the grunt work, so they can just focus on the high level issues. d) They've got a very high level of flexibility, and they can tend to family needs when necessary, even at times during busy season.

I'm glad to report now that with the increased IPO and financing activity, the $$$ are rolling in slowly. There was an uptick in partner promotions this year. 404 was a boon though, and that was almost like an expansion era in sports. When a sport is booming, it wants to expand everywhere, like the NHL going to warm weather places like Florida and Georgia. Now it's got some struggling franchises, but it's slowly but steadily getting the $$$ in.

At the end of the day,partner promotions are a lagging indicator of the economy, i.e. when the economy is booming, partner promotions increase the next year, and vice-versa. It's a tough tough road to become partner. Being good at audit does not cut it. The big 4 are for-profit Firms, so if an individual can make it rain, the odds of him becoming partner are significantly higher than the einsteins of the world.




Comments

Anonymous said…
May I ask what country/region/continent you are based in?

Awesome blog!! Definitely shows a different side to auditing for a lowly student!
Anonymous said…
You mentioned that Sr. Mgs. can't get a Controller gig due to lack of private experience. If that's the case, when's the best time to get out? Manager? Senior III?

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