Archive for the ‘Mergers’ Category

Friday, August 23rd, 2019

Flashback Friday – Mergers 2019

“A dream doesn’t become reality through magic; it takes sweat, determination and hard work.” – Colin Powell

There are major changes ahead for M&A – read more here in this flashback post.

  • Work harder on yourself than you do on your job.
  • Jim Rohn

Wednesday, August 7th, 2019

Merging Up – Be Aware

“Beware of little expenses. A small leak will sink a great ship.” – Benjamin Franklin

As the title says, be aware. Maybe I should also add, beware!

It has always been in the back of your mind that when the time comes, you will fund your retirement by simply merging your firm “up” into a larger organization. After all, the M&A market for CPA firms has been very hot for several years. No need to worry because you have no one in your own firm that has the skills, ambition, and desire to buy you out.

Beware, because that is beginning to change dramatically. The larger firms are not so eager to acquire another compliance accounting firm. They are seeking to make their firm more diverse and to bring in companies offering complementary services such as technology consulting, technology security and data analytics.

Here’s an example from a firm I have always admired, LBMC in Nashville:

LMBC, a leading accounting and consulting firm in the US Southeast, has acquired Nashville-based Think Data Insights, a national data analytics company.

Click here to read the article.

  • Beware of false knowledge; it is more dangerous than ignorance.
  • George Bernard Shaw

Tuesday, June 11th, 2019

Merging Up? Get Ready For Some New Rules

“The measure of intelligence is the ability to change.” – Albert Einstein

Have your merged up? Are you considering merging up? Here’s something to think about and understand.

It comes from a post by @SkipPrichard about a book written by Kevin Kruse – Great Leaders Have No Rules: Contrarian Leadership Principles to Transform Your Team and Business. Read the reviews on the book. It might be one you should have on your summer reading list if you are a leader or aspire to be one.

Yes, this whole book came from a crazy Post-It Notes story. About 20 years ago I had sold my company and joined the new company as a partner, VP, and I reported to the CEO. He had me very excited and committed to the future of the new combined organization and how we would build it together. But then the CFO docked my first expense check by about four dollars. He told me they won’t reimburse my Post-It Notes because it was a wasteful expense. It was a rule—no Post It’s—that I didn’t know about. In that moment, that one rule, suddenly made it clear that this was “their” company, not mine. They were in control, not me.

Many practitioners have learned the hard way that a so-called merger is not what they thought a merger would be like. For the most part, I believe CPA firm mergers work out well. But, not always. Just be prepared for a new way of life.

  • Highly successful people take immediate action on almost every item they encounter.
  • Kevin Kruse,

Friday, May 3rd, 2019

An Opportunity Exists

“Your most unhappy customers are your greatest source of learning.” – Bill Gates

For many years CPAs working in small to mid-size firms have been delighted when a client of a big, national firm realized they were paying way too much for services that a smaller firm could provide in a more affordable manner and with more care and attention.

Sometimes the larger firms will actually refer certain clients to local and regional firms because they were just too small to fit the big firm’s profile. A too small client of a national firm is often a very large client for a local/regional firm.

This opportunity continues, but another opportunity has been created by the merger mania within the CPA profession.

When one of your local competitors merge-up, there will be clients who do not want to be part of the larger, acquiring firm. We usually see the departure of clients after the first tax season. The “new” firm just does not provide the same, intimate client relationship as the former firm. This is partly because their key contact is retiring and a new person has been introduced and partly because the larger firm has different methods and maybe those methods are just not as friendly and comfortable to the smaller firm clients.

Make sure that any client who is dissatisfied with their current firm knows about your firm – build your brand and reputation and be visible in your business community. Even more important, always be in tune with how your own clients feel about your service.

  • Spend a lot time talking to customers fact to face. You'd be amazed how many companies don't listen to their customers.
  • Ross Perot

Thursday, February 7th, 2019

Mergers 2019

“A dream doesn’t become reality through magic; it takes sweat, determination and hard work.” – Colin Powell

My firm did its first acquisition/merger in 1993. It was a fast way to grow and to enter a new market. It worked for us and the firm did several more over the years. The firm also acquired non-traditional firms such as an employee benefits firm and a TPA company when it was very unusual to do so.

Things have certainly evolved in the CPA firm M&A market since 1993. During our first merger, all we could think about was not losing clients of the acquired firm. We did not lose clients but we lost employees. We learned from that experience and for the next acquisition around 1996 and going forward, we focused on retaining talented people. It had become more important to retain people than clients.

Daniel Hood of Accounting Today recently interviewed several CPA consultants who focus on M&A. There are major changes ahead for M&A. Valuations of firms are declining. It is becoming a buyer’s market. Acquirers are more selective and do not necessarily want more compliance clients. The cost of technology, going forward, is also an issue, especially for smaller firms.

Be sure to read the interesting article. I know many of you are experiencing a succession dilemma.

  • The difference between the impossible and the possible lies in a man's determination.
  • Tommy Lasorda

Thursday, January 10th, 2019

How to Become Virtual

“Mergers generate substantial synergies.” – Roger Altman

Virtual CPA firms have been evolving for many years now. Many have gained much notoriety and a substantial client following.

I enjoyed reading this article about my good friends at Beach Fleischman, a Top 200 firm based in Tucson, Arizona. The joined forces with a smaller firm to create a virtual firm, MOD Ventures, that will service both firms’ outsourced accounting services clients going forward.

Read all about it here, via Accounting Today. Maybe it will motivate you and your firm to become more creative and take advantage of virtual opportunities.

  • Fight for the things that you care about, but do it in a way that will lead others to join you.
  • Ruth Bader Ginsburg

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