The traditional partnership structure has reached its limits: It is capital-constrained. Much of the profits go back to partners each year, and the company has retirement obligations for former partners. At the same time, accounting firms must heavily invest in artificial intelligence tools to deepen their consulting business and grow profits.

Sensing opportunities for consolidation, private equity (PE) firms have purchased shares in five of the top 26 US accounting firms in recent years. Tower Brook Capital invested in advisory and accounting expert EisnerAmper. New Mountain Capital took an interest in Citrin Cooperman, and Parthenon Capital got involved with Cherry Bekaert.

In February 2024, Baker Tilly US signed a $1 billion deal with Hellman & Friedman and Valeas Capital Partners. Shortly thereafter, the American branch of Grant Thornton, the world’s seventh-largest accounting firm, announced an investment by New Mountain Capital. These financial alliances have proven beneficial, as seen in the case of Citrin Cooperman, which has completed 17 acquisitions since New Mountain Capital’s capital injection, to become a $600 million powerhouse.   PE firms’ appetite for accounting firms is not limited to the US. It has a global reach, as seen in the UK, where Hg and PAI Partners are now shareholders in Azets, one of the top 10 UK accounting firms. Azets, in turn, has acquired 90 local providers. Waterland Private Equity took stakes in two other UK accounting firms, Moore Kingston Smith and Cooper Parry

Nevertheless, Alphabet didn’t have many close competitors from which to poach good candidates, so CEO Sundar Pichai had to expand his search beyond the well-known frontiers of the tech mecca.

Ashkenazi served Lilly in a variety of finance and operations roles, including as CFO for the past three years, making a name for her role in the success of popular new drugs including the diabetes treatment Mounjaro and the weight-loss drug Zepbound.

Her challenge was not to market the drugs but to manufacture enough of them to meet an exploding demand. Wall Street approved; during her stint as CFO, Lilly shares jumped 300% and the company reached a market cap of more than $800 billion. 

That’s what made Ashkenazi attractive to Pichai.

“She has a track record of strategic focus on long-term investment to fuel innovation and growth,” he said in a statement.

She arrives at a critical time for Alphabet. In an internal memo, management recently informed employees that there would be restructuring, with possible layoffs, as Google positions itself for the next wave of innovation in artificial intelligence. The new CFO will by investing billions in AI to compete with Microsoft and Amazon, but must do so selectively, allocating capital across competing projects. That’s where Ashkenazi’s experience in weight-loss drug navigation comes in handy. To snatch her from Lilly, Pichai offered three big incentives: a close to $10 million signing bonus, an equity grant of $13 million, and future annual bonuses that could skyrocket to 200% of her base salary.

Clothing retailer Gap is also freshening up. Its new CEO, Richard Dickson, arrived in 2023. At one of its department store competitors, Macy’s CEO Jeff Gennette handed over the keys to Tony Spring in March.

Those departing executives are not outliers. According to outplacement firm Challenger, Gray & Christmas, 622 CEOs announced during the first quarter of 2024 that they would soon quit. It was the highest quarterly total on record. The number of executives leaving increased by 50% compared to the first quarter of last year, and 2023 was already a record year. The executive search firm Russell Reynolds calculated that 1,914 American CEOs left last year, a 55% increase compared with 2022.

Why are they heading for the exit? Many baby boomers are simply retiring: 21% of all departures are justified by old age. Furthermore, women leave relatively more frequently than their male counterparts. Of the departing CEOs, 20% were women who didn’t feel supported, saying they suffered from a lack of flexibility and not enough resources.

Growing challenges may also explain this executive turnover. During turmoil such as the Covid-19 pandemic, board directors tend to favor a well-known existing CEO. When the crisis diminishes, directors become bolder and more demanding, thus riskier for  CEOs, who could lose their position.

Executive search firm Cowen Partners underlines the new challenges. The top honcho must deal with inflation, supply chain disruptions, ever-evolving technology tools, partly remote employees unfamiliar with the corporate culture, customers interested in environmental, social and governance scores and a growing to-do list. CEOs could suffer burnout. According to executive consultancy Equilar, the median tenure among CEOs of S&P 500 companies is shrinking. It was six years in 2013 and 4.8 years in 2022.    

Sherry House, 52, who becomes Ford’s vice president of finance on June 3, joins from Lucid Motors, where she spent three years helping to deploy its first luxury electric vehicle. John Lawler, Ford’s current CFO, who has been promoted to vice chair, will chaperone House in transitioning to the CFO role in 2025.

The move from a startup to one of Detroit’s Big Three is a surprise, but it demonstrates Ford’s determination to become an EV player. Jim Farley, Ford’s CEO, has admitted publicly in quarterly earning presentations that the EV segment has been the “main drag on the company”; he expects to finish 2024 with a loss of more than $5 billion in the EV division.

Ford needs “urgently to build a profitable EV business and generate new and recurring revenue streams,” Farley said in introducing House.

The future CFO arrives as an outsider, but not altogether. She was instrumental in Lucid’s launch as a publicly traded company, and she previously spent several years at Waymo, Alphabet’s driverless technology subsidiary. Nevertheless, in returning to Michigan, she claims to come back to her family roots; her grandfather was a tool and die maker at Ford and she earlier worked at supplier Visteon and at General Motors.

She will face numerous challenges finding a path to profitability in EVs for Ford, however, including navigating price cuts, Chinese competition, environmental initiatives, lack of charging infrastructure across the US, and short-term tepid demand for EVs. And outsiders’ reception can be brutal in the auto industry. Tim Stone, who joined Ford in as CFO from SNAP in 2019, only lasted 18 months before switching to a software company.

Beginning in September, Netherlands-based Stellantis will sell the Chinese-built Leapmotor vehicles throughout Europe, with Leapmotors’s lineup complementing its selection of cars. The companies plan to expand sales to the Middle East, Africa, India, and other regions in late 2024, but not in the United States, the companies said. 

Stellantis CEO Carlos Tavares said Tuesday following a press conference that Chinese carmakers are expected to grow rapidly, so he wants to take advantage while he can. 

“Whether I like it or not, with me or without me, Leapmotor would have been in Europe anyway,” Tavares said. “What I am doing is just trying to be opportunistic against a dynamic that has been created by the Chinese carmakers.” 

But Renault CEO Luca De Meo sees China electric vehicles as a threat. In a 19-page letter to European leaders sent in March, De Meo emphasized the Chinese brands’ “rapid inroads into the EV segment.” They already claimed a 4% market share in Europe in 2022, and imports from China have increased fivefold since 2017. 

Cheaper vehicles such as MG and BYD, followed by Tesla’s Model Y, produced in Shanghai, are becoming popular in Renault’s backyard. Not only is China cheaper, but the country controls 75% of battery production capacity and 50% of the mines extracting rare metals. 

To counter these advantages, De Meo is pushing for an Airbus-style alliance of European automakers: a “European purchasing platform for critical materials” that would give them the heft to demand better prices. They could also develop common standards and even “share 70% of the technical content of cars, the part that consumers do not see,” De Meo argued in his plea for a “transnational approach.”  

Bolstering his case is the sheer size of the European auto industry, which employs 13 million people and is responsible for a foreign trade surplus of €102 billion. Still, the CEOs of Volkswagen and Mercedes Benz have not voiced their support. Rather, they are focused on protecting their own strong businesses in China. 

The old continent has missed a few technology coups. It was left behind in the development of semiconductors and internet platforms, and American giants Google, Meta, Amazon, and Microsoft—via OpenAI—are bidding to dominate the artificial intelligence landscape.

But French policymakers are hoping it is not too late to disturb the theater of operations. They declaring their country a “startup nation.”

Mistral, created in February 2023 by three students from elite French schools, has already launched its first AI model, Mistral Large, to compete with OpenAI’s GPT-4. Earlier this year, it introduced its conversational assistant, Le Chat, the European answer to ChatGPT.

CEO Arthur Mensch, 32, knows his competitors well. He spent close to three years at Deep Mind, Google’s lab in Paris, while his co-founders Guillaume Lample and Timothée Lacroix worked at Meta Lab.

Mistral is still considered a lightweight compared to OpenAI, however. The 34-employee company has raised €500 million, while OpenAI, with its 800 employees, has more than $11 billion in funding. But it gets plenty of bang for the buck, its founders argue,

It needed only €20 million to train Mistral Large, compared to more than $50 million for GPT-4. Mistral is multilingual, not overly Anglo-Saxon oriented. And some of the Mistral software is open source, making it attractive to developers and businesses eager to experiment with generative AI. BNP Paribas, which was part of the funding round, is also a customer; the bank is testing Mistral’s capacity to gather data and digest information from analysts and quarterly results. Whatever the obstacles in its way, Mistral is a hit with France’s policymaking elite. French President Emmanuel Macron is celebrating it as an example of “French genius” and pushing its star onto the European stage. And Mensch lobbied successfully for the friendly Artificial Intelligence Act passed by the European Parliament in March. His message: Don’t let Americans establish global standards for other countries.      

On the plant floor, inflexible shifts are the standard. But the number of committed young workers is declining while baby boomers in manufacturing are retiring.

The Pew Research Center projects that 75 million boomers will leave their jobs by 2030. How can this exodus be reversed? One possibility is to embrace a flexible work schedule. Among the pioneering factory owners that have found an alternative to rigid shifts are the Land O’Lakes dairy plant, GE appliances, Graphic Packaging, and tool manufacturer De Walt.

At Land O’Lakes in Minnesota, employees choose their own starting times and shift lengths. At GE Appliances in Louisville, Kentucky, workers using the MyWorkChoice app commit to a minimum number of hours per week, but they pick and choose between 10-hour and five-hour shifts.

Furthermore, they can volunteer for overtime. This approach attracts different candidates to the plant, such as mothers with young children, college students, or semi-retirees looking for a part-time job. “If I need to miss a day for my kids’ appointments or games, I can do so without penalty,” explains Sydney, an app user quoted on MyWorkChoice’s website. “Temps typically survive an average of six weeks,” MyWorkChoice contends, whereas “70% of workers with flexibility last over one year.”

Flexibility can be an efficient tool for attracting and retaining talent. JCPenney’s Human Resources division discovered this when implementing the Open Shift app for its department stores and distribution centers. Associates can now exchange their time slots with colleagues or offer their shifts to a group of employees to find a replacement. They can also pick up overtime at another store or warehouse. Andre Joyner, JCPenney’s chief Human Resources officer, is delighted by this solution. Before the Open Shift pool, 13% of positions in the company were unfiled; now, it is less than 5%.  

Just a few months ago, AI enhancements were presented as complementary tools that would eliminate tedious and repetitive tasks but still require a white-collar supervisor. However, generative AI can now create content and summarize complex ideas, threatening even high-skilled jobs.

A recent PwC global survey of more than 4,700 CEOs from 105 countries shows that 46% of executives expect AI to increase profitability. A quarter of the CEOs said AI’s growth would lead them to job cuts in 2024.

Tech companies have already begun their layoffs. There have been 4,600 job cuts in the US due to AI since May 2023, according to outplacement firm Challenger, Gray & Christmas. And more cuts will follow. German software giant SAP recently announced a shake-up affecting 8,000 jobs as the company pursues more task automation and AI-driven efficiencies.

Logistics company UPS is also looking to reduce its workforce. It plans to eliminate 12,000 jobs, including in the pricing department that calculates what to charge customers—AI can do the math just fine.

White-collar posts are endangered by two trends: the automation of their work and the greater appeal of AI compared to their current field. For instance, online composition aid Grammarly is letting go of 230 of its 1,000 employees as the company adapts to the new age of AI, where grammarians are less in demand. Likewise, Amazon, Alphabet and Snapchat are downsizing hundreds of jobs, but not owing to automation; instead, their leaders are reallocating resources toward promising AI technology. White-collar workers are merely collateral damage. According to the Society for Human Resource Management, endangered species include financial analysts that study market trends, lawyers involved in regulatory compliance, software developers who debug and optimize networks, and human-resource experts. Safe havens from AI are disappearing fast.

According to data analytics company GlobalData, the VC funding deal value in the US plunged 45.6% to $109.4 billion last year. One year earlier, more than 11,600 deals were announced, with a value of $201.2 billion.

Europe followed the same trend. The annual State of European Tech report, produced by the London-based VC firm Atomico, showed a sharp decline in tech funding, from $82 billion in 2022 to $45 billion in 2023.

Indeed, “The projected volume of total investment in 2023 is expected to equal less than half of the investment seen in the peak year of 2021, across every global region,” states the Atomico report.

Many factors explain the decline: inflation, interest rate growth and geopolitical tensions. Fortunately, the success of OpenAI’s ChatGPT swayed VC funds to loosen purse strings.

As a result, artificial intelligence (AI) startups captured almost one-third of the total dollars invested in technology in the US last year.

OpenAI, Anthropic, Stripe and Inflection AI all secured billions in 2023. Grocery delivery offerings and audacious consumer concepts were less in demand. Startup CEOs had to downplay their expectations. Some of them lowered valuations to raise funding.

Only 8% did so in 2022, but many more (20%) reset their valuation in 2023, according to PitchBook data. Rising interest rates obliged startups to adjust to more-realistic forecasts.

Ironically, VC-backed organizations faced more headwinds than did hedge funds. Their bets on stock markets paid off when share prices benefited from an upswing. Big bets on natural disaster bonds also brought success. The world’s 20 leading hedge funds raked in $67 billion in profits, according to LCH Investments. In fact, 2023 was a record year for hedge funds, while VC returns last year entered negative territory. Nevertheless, what matters in the VC world is long-term perspective.

Similarly, the Boeing Company is opening its rarefied C-suite to a woman.

Stephanie Pope, a 30-year veteran of the aeronautics giant, was elevated to COO On January 1, a new role created for her, making her the likely successor to CEO David Calhoun when he retires.

For Gass, much like Pope’s experience, the handover lasted several months.

Gass, 52, was already an accomplished retail executive when she stepped into the president’s role at Levi Strauss last January. She had been Kohl’s CEO during the Covid-19 pandemic and before that had spent years at Starbucks, Procter & Gamble, and Ann Inc, the parent organization of Ann Taylor.

To be sure that she was suited to lead the company, however, Chip Bergh, departing CEO of Levi Strauss, took Gass under his wing for a year before giving her the keys to the blue jeans kingdom. She will now be able to accelerate the company’s international growth strategy and push further its business model as a DTC (direct to consumer) seller.

Pope, 51, is more of an insider; at Boeing, she has served in all three main units of the organization: the commercial branch, defense, and services sectors.

She took over the Services department last April, giving her an advantage over her male counterparts, Brian West, the finance chief, and Stan Deal, the commercial chief. Services generates one-fourth of Boeing’s total revenue and is its only unit earning a profit. As the new COO, Pope is responsible for driving supply chain, quality manufacturing, and engineering excellence. That’s the road map to finally ascend to CEO at Boeing. Only that one final mission remains for the co-pilot and CEO-in-waiting.