like it or not, size sells.
by domenick j. esposito
8 steps to great
while conventional wisdom tells us that better is better, it’s plain and simple nonsense when it comes to midsized cpa firms and a convenient excuse for a less than stellar growth by a firm’s partner group.
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just look at “better” through the lens of the marketplace for both existing and prospective clients and talent.
this applies particularly to firms doing $50 million to $100 million in annual revenue with quality profits per partner who want to make their firms bigger, better, stronger and more profitable.
i have no doubt that, to the marketplace, bigger is better. and that means size sells and matters. make no mistake about it: your existing and prospective clients and people respect big and more importantly, buy big, known brands.
the supposition is that if you are big, you must be good. if you are big, you must have client and people credentials that are impressive. and those credentials attract better quality prospects and people. with better clients and talent and a brand that is known for certain niches, your firm has pricing power when it comes to fees and that translates into better profits per partner. and at the end of the day, our scorecard is profits per partner.
so, while you might not like to hear it, to the marketplace, if your firm is big, it is an easier buy for them than if your firm is better. even though your firm might be better, if the marketplace doesn’t recognize your brand, there is always going to be buyer skepticism. and you don’t need buyer skepticism in making the sales pitch. ever hear of the old saying – “be safe, it will be difficult for anyone to criticize you if you buy ibm”? sure you have. we all have heard it many times over the years. same is true with accounting, tax and advisory services. now that is not to suggest that your firm doesn’t need to deliver on the sales pitch with quality services. of course you do. it makes absolutely no sense to bring clients in through the front door and have them leave you through the back door.
if you are not growing into a bigger, better, stronger and more profitable firm at an acceptable rate (say 8 percent per annum, which is very difficult to do organically in this economy), there is no better time than today to jump all over the many merger opportunities bubbling out there as founding partners (baby boomers turning 65 every eight seconds since 2011) pursue exit strategies.
more than one out of every two midsized cpa firms is either discussing a merger combination or is planning to do so soon.
in many cases, this is occurring because ceos are not confident in the leadership talents and financial wherewithal of younger partners. in many other cases, it is occurring because these firms are unable to attract and retain talent. and in still other cases, these firms are finding that they are not able to hold onto their growing clients as they seek capital.