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Why Would Fourteen Baker Tilly Partners Give Up Equity for Salary?

This one’s a stumper.

Accountancy Age reports that 14 Baker Tilly partners are giving up their equity stakes to go on salary including “international CEO Geoffrey Barnes, head of IT advisory Richard Spooner, and six partners from the London office.” A spokeswoman told AA that this is simply a change in “remuneration” and the fourteen individuals would remain partners and there “would be no change to client services.”

Riddle me this partners out there: why would a person with an equity stake go back to being a senior manager (i.e. in terms of the compensation structure)? Something doesn’t compute there. Since we’re dealing with the international CEO and head IT advisory, maybe there’s some kind of political or solidarity motive here but the Accountancy Age report is skimpy and its editor Gavin Hinks admits that there isn’t much to go on and gets to speculating:

The big question people are asking is what does it mean? Or does it mean anything at all? There are a number of reasons a partner’s status might change. They may simply no longer want the risk of being partner. The firm may believe profits are too diluted and want fewer partners.

I personally don’t buy the first motive. If they were sick of the risk, why not just leave the firm? There are plenty of jobs out there with better compensation packages. Diluted profits is a little more plausible but the international CEO and head of IT advisory? Why would they opt out? Since the partners in question made this decision themselves, it’s unlikely that this was a punitive measure but perhaps BT had a little bit of an internal email scandal, they were given a multiple choice form of punishment and this was the least severe option? I’ve really got nothing better at this point. People with theories that are slightly above the crackpot level are invited to share.

Let’s Speculate About Why Deloitte and KPMG Aren’t on the America’s Largest Private Companies List

Riddle me this, oh wise Going Concern readers – Forbes’s list du jour is America’s Largest Private Companies and its Top 10 has two familiar names: PwC and Ernst & Young but Deloitte and KPMG are nowhere to be found.

Here’s a rundown of companies, their revenues in billions and # of employees:

1. Cargill – $109.84, 130k
2. Koch – 100.00, 70k
3. Bechtel – $30.8, 49k
4. HCA – 30.05, 190k
5. Mars – 28, 65k
6. Chrysler – 27.90, 41.2k
7. PwC – 26.57, 161k
8. Publix – 24.32, 142k
9. E&Y – 21.26, 141k
10. C&S – 20.4, 16.6k

Just for the sake of not opening a bigger canner of worms we’ll ignore the enormous drop in revenues from #2 to #3.

Both firms have over $20 billion in revenues – Deloitte’s the biggest of the Big 4 for crissakes – so that puts them in the top ten easily, yet they’re completely MIA.

If you look at the methodology, you’ll find that both firms should easily qualify to make the list:

In addition to our $2 billion revenue requirement, the companies on our list have either too few shareholders to be required to file financial statements with the Securities and Exchange Commission, or have shares whose ownership is restricted to some group, such as employees or family members. We exclude foreign companies, companies that don’t pay income tax (like Mohegan Tribal Gaming Authority), mutually owned companies (like State Farm Insurance), cooperatives ( like Central Grocers), companies with fewer than 100 employees, and companies that are more than 50% owned by another public, private or foreign company. We also leave out companies whose primary business is auto dealerships or real estate investment and/or management.

If you take a hard line here, “companies that don’t pay income tax” should probably disqualify all the firms but obviously Forbes made at least two exceptions. As for the rest of requirements, nothing really jumps out so it’s anyone’s guess.

Perhaps Deloitte and KPMG just got their applications in late? Maybe they were “meh” on the whole list? Maybe they don’t support the flat tax so Teve Torbes just said “To hell with them.” ? The editors for the piece don’t have emails included in their bios but we’re pretty curious as to how this whole thing came together, so please get in touch.

Theories (DWB is going with “because they both suck”) on the alleged oversight/snub are welcome.