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What is base pay range for L5 at Accenture?
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Subject Expert
I’m not an EY partner and I can’t speak to the details of how their buy in and loan program are structured, but they are just that: details.
The broader point, and what you should probably focus on at this level in your career, it’s just the concept around equity. When you own equity, it means you own a piece of the firm. You’re a shareholder. It’s just like owning equity in a public company, except, well, most consulting firms are private companies. Owning equity is definitionally what being a partner is.
Being a shareholder means you get paid a portion of the firms overall profit. The flipside of that is that your money, the funds you put in to buy equity, become part of the firms net working capital base. That’s the pot of money that’s used to pay rent and salaries and whatnot between the time work gets done and when clients actually pay. If the firm runs low on money, they ask the partners to put more in (a capital call). If the firm has too much cash on hand at the end of a year, they return it to the equity holders just like any other company would (though whether it’s a distribution or a bonus or a dividend depends on the specific details of how the partnership is structured).
When you make partner you’re offered an opportunity to buy equity in the firm. Most firms give you a choice of either writing a check or taking a loan; almost everyone takes a loan because the loans are usually very cheap and there are certain tax advantages. But the way in which each firm chooses to structure their equity and ownership and buy in and loan program will vary from firm to firm.
For Accenture that would be different then I guess since it’s public. But for private partnerships you say there is no volatility on the „share price“
Subject Expert
You need to maintain 30% capital, so yes, essentially you contribute every year because your earnings go up in the beginning of your partner career.
Firm offers loans at really low rates, so most of us just do that. Financing it is not a problem basically.
When you leave or retire, you get that equity back albeit after taxes it’s not that much.
Does the equity you buy on a yearly basis increase/depreciate in value somehow so that after X years as Partner in the firm you get „interest“ + the base amount you put in?
Mentor
You mean at retirement, not end of the year, right?
Sucks you don’t have access to the interest until you pull it all out along with the equity (which is what I think you just said).
By the way and to be clear ( before the other KPMG partners point this out), there are more than one accounts that accrue interest (see what I did there?). Interest payments on those accounts are available to do with what you will.
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