“Half of Greater Baltimore's 15 largest CPA Firms are looking to get bigger by gobbling up smaller rivals.”is the lead sentence in an article (premium content) by Gary Haber in the Baltimore Business Journal.
When he called me, he was trying to decide if this was a trend, and if so, is it unique to our region.
Given that in 2009 there were 67 CPA firm mergers (in the Top 100 firms) totaling $821 million and the AICPA estimates that the number of firms nationally will shrink from 47,000 to 40,000 over the next five years, my response was welcome to merger-mania – CPA style!
There are several major trends converging that are causing this trend, which is actually global, national, regional, and local.
These are major trends by themselves, taken together and you get merger-mania at all levels.
Here is what I am seeing:
So what should you do about this?
It all starts with your vision, purpose, strategy. Does it fit your strategic plan?
Second is will it fit your culture? This is probably the most significant (and hardest to assess) factor. Do the firms share the same vision and values? Will the people fit together? Despite the focus on compatible systems and structures, none of these matter if the people cannot work well together. remember that all of these inanimate things are driven by? People!
Once you make the decision, I suggest a major collaborative planning session to re-establish the new collective vision, values and strategy which will re-establish your intentional culture. The costs of not doing this can be significant. Planned objectives are not met or delayed, internal people and team conflict consumes firm talent and resources on non-client focused activities, the firm environment decays from within making it unattractive to top talent, and it is simply not fun anymore.
How do you tip the odds in your favor?
Same advice, start with your strategy. Invest in a collaborative strategic planning process to develop a “new” shared vision, strategy, purpose and values and then create a leadership development plan that will reinforce the strategy, purpose, and values (this is how culture reinforcement is achieved).
The more you invest and the earlier will yield the highest returns. Several leading researchers have talked about ROC as 15X to 20X the competition!
What do you think? Do you have the urge to merge?
Some more resources:
Seven Keys to a Successful Mergerat CPA Trendlines (great checklist from August Aquila)
Mergers & Acquisitions of CPA Firms – Journal of Accountancy, Mar 2009