Though many accounting firms have looked to private equity to raise capital in recent years, others have decided that’s not the route for them. BDO, the nation’s sixth-largest accounting firm, made headlines in 2023 when it announced it was starting an employee stock ownership plan (ESOP).

The plan, financed with $1.3 billion in private credit from Apollo Global Management among others, gave all of BDO’s 10,000 eligible employees a stake in the firm.

Around a year and a half later, CFO Brew spoke with BDO’s longtime CEO, Wayne Berson, about how the firm is faring, and about what changes he’s seen as a result of the ESOP.

An alternative to private equity: BDO periodically reevaluates its business model and, a few years back, was looking to revamp itself to “support continued growth, help with investment, and also long-term sustainability,” Berson said. Private equity investment was one option it considered. PE firms were calling at the rate of about one a week, Berson said, and BDO had noticed that PE-backed accounting firms were outcompeting it for acquisitions.

But BDO leadership decided that PE wasn’t the right option for the firm.

Click here to read more on how BDO’s ESOP is playing out.—CV

It isn’t just growth that investors want.

According to a new analysis from EY, companies must “earn the right to grow” by achieving a high return on investment—and growth at the expense of efficiency can harm shareholder value.

Experts at the Big Four accounting firm analyzed 360 S&P 500 companies “using a proprietary, forecasted cash flow model” to get a solid grasp on how growth and capital investment contribute to total shareholder return (TSR). It was return on invested capital (ROIC), an indicator that executives may overlook, that made all the difference, EY found.

“Investors want to see that companies can turn capital into new value,” EY noted. “Companies with low ROIC should focus on improving capital efficiency—earning the right to grow—as a condition for allocating capital.”

In this study, EY separated companies based on whether they had low ROIC or high ROIC over a three-year period ending in 2024. Here’s what they found.

To keep reading about ROIC and investors, click here.—AZ

Confidence in sunshine? Check. Confidence in rain? Check. Confidence that spring will come again? Check.

Confidence in current business and labor market conditions? Well, that’s a little lacking at the moment. Consumer confidence declined for the fourth consecutive month, and consumers’ outlook on future conditions fell to its lowest point since 2013.

In March, the Conference Board’s consumer confidence index fell 7.2 points, bringing it down to 92.9. Analysts were anticipating a dip to 94.5, per FactSet.

Consumers’ short-term outlook on income, business, and the job market dropped to 65.2, which the Board notes is its “lowest level in 12 years and well below the threshold of 80 that usually signals a recession ahead.”

The percentage of consumers who expect a recession to occur in the next year was unchanged—from the nine-month high it was already at. Summed up: Consumers aren’t feeling great.

Click here to keep reading.—NP