Archive for the ‘Mergers’ Category

Wednesday, October 31st, 2018

The Problem With People

“Do your little bit of good where you are; it’s those little bits of good put together that overwhelm the world.” – Desmond Tutu

I rarely repost someone else’s blog post. I have only done it with Seth Godin’s posts. His recent blog post speaks to all of us at one time or another.

Perhaps, you are new to your firm, trying to learn how to become a successful CPA. Maybe you are a new partner assessing how you can make a difference within the group. With merger mania, maybe you and your firm have been acquired by another firm and things feel very different and troubling.

The Problem With People Is That They Outnumber You

It doesn’t make any sense to spend your life proving them wrong, it’s a losing battle.

Far more effective is the endless work of building connection, forming alliances and finding the very best you can in those you engage with.

You can’t possibly know what it’s like to be someone else, but it’s also true that no one knows what it’s like to be you.

One more reason to put in the effort to find the good.

  • Life becomes easier and more beautiful when we can see the good in other people.
  • Roy T. Bennett

Tuesday, September 4th, 2018

Establish An Email Policy

“Challenges are what make life interesting and overcoming them is what makes life meaningful.” – Joshua J. Marine

Not sure why, but many CPAs seem to have a fascination with retaining emails. I have talked to some who admit that they have thousands in their inbox that might date back two or three years or more.

I like a comment in the article I featured last week about M&A and technology. An acquiring firm gets IT involved during due diligence to start educating the firm being acquired about retention policies. When your data comes over to the new system, all of your email older than six months will go away. You need to move client emails to the client file.

How would some of your partners feel about that? If you are a smaller firm and have not implemented these essential types of IT policies, start preparing now.

  • When one door of happiness closes, another opens; but often we look so long at the closed door that we do not see the one which has been opened for us.
  • Helen Keller

Monday, August 27th, 2018

The Importance of Technology When Talking M&A

Any sufficiently advanced technology is equivalent to magic.” – Arthur C. Clarke

BoomerDuring the 2018 Boomer Technology Circles Summit, Jim Boomer moderated a panel discussion on best practices in mergers and acquisitions regarding technology. I know at my firm, the tech staff were involved early on in any merger discussions and often seemed to work magic.

Boomer has written a great summary of the discussions. THIS IS GREAT INFORMATION for anyone considering a merger. Be sure to read it!

Here are the questions that were explored:

How early does IT need to get involved in the due diligence process? And as an IT professional, how do you push to get involved?

We’ve counseled firms that the technology cost of acquiring a firm runs, on average, $10,000 per person. Is that consistent with your experience?

If there a time of year that’s best for making the integration fast and effective?

There’s a lot of talk about “rip and replace” strategy versus peeling off the bandage slowly. What’s the more effective method in your experience?

How long do you let legacy data ride? And what if the acquired firm’s technology spend wasn’t what you were told?

What are your top three priorities to have implemented on Day 1?

  • The human spirit must prevail over technology.
  • Albert Einstein

Wednesday, July 11th, 2018

Left Standing At The Altar

“Let the beauty of what you love be what you do.” – Rumi

Your accounting firm has several partners in their late 50s or early 60s. You don’t have enough young partners or future partners to take the firm into the future and still pay-out a significant amount of retirement dollars.

What do you do? The popular choice is to seek a larger firm to acquire your firm.

In a recent article for Accounting Today, Terry Putney and Joel Sinkin have shared ways to make your firm more attractive to acquirers. It used to be a seller’s market but it has now become a buyer’s market because so many smaller firms are looking for succession assistance.

A large firm is “looking at” your firm and another firm of similar size. The other firm has embraced technology and you are still not completely paperless. They choose the other firm and leave you standing at the altar.

Here are the Five Ways to Beautify Your Firm For M&A. Follow the link to read helpful descriptions about each of the five ways.

  1. Embracing technology
  2. “Brand” versus “partner” loyal
  3. Good clients and staff
  4. Niches
  5. Realistic terms

Thanks to Terry and Joel of Transition Advisors for this helpful information.

  • The future belongs to those who believe in the beauty of their dreams.
  • Eleanor Roosevelt

Monday, April 23rd, 2018

Merger & Acquisition

“I always say, complacency is the kiss of death.” – Shari Redstone

So many firms that I have known over my many years in public accounting have disappeared. Yes, they have merged-up or merged-in. As founders of many firms have moved into retirement they have chosen to merge rather than pass the firm along to others.

Many other firms I know have become the acquirers. With them, the original firm has also disappeared to be replaced by a new name that incorporates names of firms they have acquired (usually if those other firms are large enough that their name carries significant weight).

Then there are the doubters, the undecideds. They want to grow by acquiring other firms or they want to enjoy less stress from management responsibilities by being part of a larger firm. This group wavers and worries especially if it is their first venture into the M&A world. They are afraid of the risk and wonder if they will actually like being part of something bigger. They worry if they will like their new partners. My advice? Get over it and move ahead. Don’t delay too long or some wonderful opportunities might pass you by.

  • The tragedy of life is often not in our failure, but rather in our complacency; not in our doing too much, but rather in our doing too little; not in our living above our ability, but rather in our living below our capacities.
  • Benjamin E. Mays

Friday, December 2nd, 2016

Smaller Firms

“To this day, I don’t like people walking on stage not looking good. You have to look good. If you feel special about yourself then you’re going to play special.” – Benny Goodman

Are you a smaller firm or are you looking for one to acquire?

Here’s something to think about from the recent AICPA Private Companies Practice Section and Succession Institute LLC survey:

Considering that our profession has roughly 44,000 firms, with about 600 having 21 professionals or more, we believe that the merger market for small firms is about to heat up in the short term, and the marketplace is likely to get very soft towards the end of that five-year period because of the increase in the number of firms in play.

If you think you will “merge up” when the time comes, you better get your house in order.

I have the good fortune to work with many smaller firms and these firms are focused on streamlining processes, training, technology and profitability no matter if they intend to remain independent or are preparing to merge up.

  • No matter how great the talent or efforts, somethings just take time. You can't produce a baby in one month by getting nine women pregnant.
  • Warren Buffett

Monday, November 16th, 2015

Sacred Cows

Sacred Cow – definition:

One that is often unreasonably immune from criticism or opposition. Someone or something that has been accepted or respected for a long time and that people are afraid or unwilling to criticize or question.

If you are involved in merger discussions and are acquiring a firm, be sure to ask: What are your sacred cows?

When leaders of a firm want to be “merged-in” they might shy away from talking about their sacred cows until after the deal is done. Too late. The firm that is acquiring cannot facilitate the transition if they are not aware of the sacred cows.

cowWhat I usually observe is that it is a long-time employee who cannot be terminated. CPAs are kind and loyal. They keep some long-time employees just because “she has been with the firm for 25 years, even though she hasn’t adapted to our technology” or “he’s a partner, even though his performance hasn’t been up to par for many, many years.”

Sometimes it is tax software. “We will not change our tax package.” Period.

Remember, you are running a business. Why wouldn’t you negotiate a nice departure package and hire someone at half the salary who loves technology? Why wouldn’t you negotiate a retirement timeline and make departure easy?

As for technology and software, the entire firm should be using the exact same software and following the exact same procedures. That way any team member can work for any partner or office at any given time via remote connectivity. The same goes for basic office procedures. Of course, offices have some minor nuances and personality differences but the work gets done the same way and to meet firm-wide quality standards.

  • I don't want any vegetables thank you. I paid for the cow to eat them for me.
  • Douglas Coupland

Wednesday, November 4th, 2015

Fewer CPA Firms

This is one of those on-my-mind type blog posts.

Yesterday I was reading about the latest mergers happening in the world of public accounting. Well, actually, everyday I read about the latest mergers and it has been happening for the last several years.

I wonder if anyone is keeping track of the real number of CPA firms and how that number must be dwindling.

I have heard the experts (association leaders, other consultants, etc.) say that there are approximately 43,000 accounting firms out there and that the firms of any size at all number around 2,500 and the rest are sole practitioners. The 500th largest firm has 20 CPAs.

The AICPA separates the largest 500 firms into two groups the G100 and the G400. I am sure that the list of top 500 firms has changed significantly in the last five years.

Almost every firm I talk with has talked to another firm about a merger or is currently in active talks about merging.

Has your partner group honestly discussed where your firm is headed? It’s time to talk about it.

  • Your life does not get better by chance. It gets better by change.
  • Jim Rohn

Thursday, October 15th, 2015

Merger Mania for CPA Firms

0 Avatar slide for blogIt seems that merger mania still reigns. It started with larger firms acquiring smaller firms and evolved to gigantic firms acquiring other gigantic firms and everything in between.

Have you recently been merged into a larger firm? Even though it is all about clients and industry niches, progressive firms still focus on the people side of things. In a merger, some people lose, especially those professional support people in the firm being acquired.

How did the acquiring firm in your situation perform relating to embracing your people into their culture? Did they orchestrate all of the on-boarding activities so that everyone felt included? Do you now have a clear sense of what is going to unfold during the next year? Or, do you feel like there is a dark cloud hanging over your head?

If you joined the right firm, they have a clear plan, well-documented and well-executed for making the people they are merging-in feel part of something extraordinary. They excel at communication.

How do you feel about going into the office this morning?

  • Nothing will work unless you do.
  • Maya Angelou

Thursday, April 9th, 2015

Change = Opportunity — Don’t Waste It

IMG_4817As I have worked with CPAs around the country, all ages and in firms of various sizes, I often am saddened by the wasted opportunities I encounter.

It’s usually a communication issue and the willingness among partners to be absolutely open and honest. Someone might get their feelings hurt. There might be an uncomfortable feeling within the group for a while… but it doesn’t last if everyone is focused on “the good of the firm” and not on their own, personal agenda.

Here are some examples of where change is a roadblock to opportunity (these are fictional, gathered from various interactions over my 30+ years working in the CPA profession):

  • A capable, experienced, passionate managing partner is prohibited from making the firm future-ready because she is constantly dealing with bickering partners.
  • A firm located in a great market never capitalizes on growth opportunities because they have made several people a partner when these people do not market, do not sell, do not network in the business community and some have actually never-ever brought in a new client.
  • A firm has a great expansion opportunity in a not-too-distant market, it slips through their hands because no partner will commit to being the champion of that endeavor. They are too comfortable with status quo.
  • A great merger opportunity falls through because ONE of the partners in the firm being acquired kills the deal usually because he knows he wouldn’t measure-up in the new environment.

These are some fairly major change-is-needed examples, however, I see firms miss opportunity because of unwillingness to change some simple, day-to-day activities.

In these firms, partner meetings turn into repeat discussions of old issues and Opportunity moves on down the road.

  • The wheel of change moves on and those who were down go up and those who were up go down.
  • Jawaharlal Nehru