In this blog post I answer the question, “how much do I need to buy-in at a Big 4 firm. From the Big 4 (KPMG, PWC, E&Y, Deloitte) down to the smallest firms, acceptance as an equity partner means you will need to resign as an employee, become self-employed, and invest some capital into your firm. This capital is often called ‘buy-in’. In return for this capital stake, if the year is a profitable one, you will make significantly more than if you were employed. Of course, the big question is:

How much will I need to buy in to be a Big 4 partner? (Or actually in any firm?)

It may surprise you that the amount you need to invest in a firm is more dependant on how well capitalised the firm is, rather than the size of the firm. For the top 6 accountancy firms, including the Big 4, this amount can be between £50k and £150k. It can change year-on-year, and will really depend on the state of the firm’s bank balance.

And how do I find that much money?

Probably the key difference between a Big 4 and a small firm is how efficiently and effectively this capital investment is handled. An established and well-run partnership will probably have arrangements with banks to loan you the amount you need for the buy-in.

Therefore, you don’t suddenly need to find £50k on the day you become an equity partner.

A Big 4 firm (and any other well-run firm) will set up the partnership loan with the bank for you, and automatically deduct your loan repayments from your partnership drawings. These loan repayments will normally cover the interest and capital repayments.

Don’t forget, most partners don’t earn a salary

Remember that your drawings are not the same as a wage or salary. As a partner you are self-employed, so your drawings are profits that you take out of the partnership.

If the firm is having a lean time, your drawings may be less than the higher paid directors and salaried partners in the firm.

However, it is very unlikely, unless you are a junior equity partner, for you to be in this situation at a Big4 firm.

An idea of the size of client portfolio you will need to be a partner in a Big 4 firm

What due diligence should I do on my firm before buying in

Doing your due diligence: How to assess if your firm is solvent

The definitive guide to building a business case for partnership

See whether you are a good fit for partner in your firm

What’s included in the FREE guide:

1. Extracts from real and successful business cases for partnership

2. How to structure your business case for maximum impact

3. What questions your business case needs to answer

Click here for more information about the guide

Related Post

  • How to Succeed Quickly in Your New Role

    How to Succeed Quickly in Your New Role

    Joining a new firm is an exciting prospect. However, the pressure to prove your worth can be incredibly overwhelming. So, to help you put your best foot forward, we’re sharing our advice on how to succeed quickly in your new role! From exiting your current firm to establishing boundaries at your new one, we will…

    CONTINUE READING > >

  • Should I Stay or Should I Go? How to Decide Whether to Find a New Job

    Should I Stay or Should I Go? How to Decide Whether to Find a New Job

    There will be times throughout your career when you ask yourself, “should I look for a new job?”. It may be because you’re feeling overworked and undervalued. Or perhaps your firm doesn’t have the time or resources to support your personal development. The truth is, there is a myriad of reasons why you may consider…

    CONTINUE READING > >