Becoming a professional partner (business)

[Nuriko]

Hello all, I have a question that has been bugging me for the past few days.

I've been told that a partnership interest in a firm (whether it be accounting, legal, medical or other professions) is usually worth some money (and even can be fought over in divorce court). I'm wondering how exactly one attains the interest if they are offered a partnership position after having worked for X number of years in the firm. Do they actually have to shell out cash for it, is the cost a bonus of some sort for them, is the cost deducted from their share of the gross profit or something else?

 

[Orsorum]

It is my understanding that the partners contribute their own capital.

 

[Crucial]

There should be some sort of partnership agreement that explains what should be done. These are usually drawn up ahead of time.

 

[Nuriko]

I didn't really mean starting up a partnership (or P.C., etc, but an organization with owners/partners that share the profit somehow and do the more typically white collar jobs), but more of joining an existing one. Though at some of the larger firms, I imagine that it would take a fair chunk of change (mid 6 to low 7 figures) just to buy in (if you were coming from the outside). Though I would think that if you were already working there, that maybe they would give you more leeway. Like giving you your fair share of the profit, but withholding a portion during the first few years (paying your dues so to speak) that will buy your partnership interest. Of course, I could be totally off base here, but that's why I'm asking.

 

[ArmenK]

From what I've heard about partners in the accounting business, it costs about a million dollars to become a partner and the company will loan you the money so you don't have to pay the whole amount up front.

Edit: This is for Big 4 accounting firms.

 

[Albis]

i've always wanted to know this as well and i've met so many partners from big four accounting firms but have always been so scared to ask.

maybe i'll find out someday over the summer when i intern

 

[ElFenix]

partnerships are almost wholly governed by the partnership agreement. read that first. you basically only go to the law if the agreement doesn't take something into consideration. for example, if profit divisions are specified, but loss divisions are not, the law might say that losses are split the same way profits are.

some partnerships you might not have to pony up capital, you might bring expertise to the partnership. you could be the entreprenuer, and the other guy be the 'silent' partner. gwbush was managing partner of the rangers, which meant he handled a lot of the baseball decisions, but he was a very minority owner. but, when the partnership was disolved and made a huge chunk of change, he was paid quite handsomely for his management.