By John Borrowman, CPC
Borrowman Baker, LLC, BV Staffing + Consulting
If you could find out something about compensation patterns and structures in other BV/LS practices, what would you ask? What do others pay for X experience? How much are others billing for an hour of that person’s time? Are there regional differences in either of those numbers? Practitioners who have our National BV Benchmark Survey already have the answers.
Though Business Valuation has become its own industry, the data does not yet reflect as much standardization as some we talk to seem to expect. This is especially so, of course, when it comes to Owner/Partner compensation. The range of variations undermines any realistic attempt at an apples-to-apples comparison. We elected not to request or use any of that data, thinking it best left for a broader survey of best practices in the industry.
The survey begins by overlaying a pattern on the functional hierarchy of a BV practice. Survey participants slotted their employees into one of four levels, then shared base salary, bonus, chargeable hourly rate, education, credentialing, and other data on each one. This data is presented, first, on a nationwide basis. The analysis goes beyond calculating median, 25th and 75th percentiles to provide 10th and 90th as well. The numbers for base salary, chargeable hourly rate and education are then sliced and diced both regionally and by practice revenue, comprising a total of two dozen pages of tables in all.
One conclusion that jumps out from the data is how quickly an employee’s value rises when climbing the lower rungs of the BV career ladder. Nationwide, the increase in average base salary to Level 2, from Level 1, is nearly 33%. The average jump to Level 3 is more modest at 24%. The final step to Level 4 averages 29%, however.
The survey also reviewed broader practice management data, including employee compensation issues involving performance reviews, pay raises and bonus structures. About 80% of the participating firms have a formal employee performance review, and about 52% of handle it annually. Perhaps not surprisingly, the two biggest drivers of bonuses are Owner/Partner Discretion and Employee Individual Revenue Production.
These conclusions – and many more – will be addressed during our presentation at the ASA Advanced BV Conference, October 7-9 in San Antonio. Visit our booth in the Exhibitors’ area throughout the conference. We’ll also be attending the AICPA ABV Conference, November 7-9, in Orlando. Come by to see us and ask us your comp related questions.