{"id":5559,"date":"2010-01-19t18:44:21","date_gmt":"2010-01-19t22:44:21","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=5559"},"modified":"2016-04-19t11:19:46","modified_gmt":"2016-04-19t15:19:46","slug":"accounting-firm-mergers-what-could-go-wrong","status":"publish","type":"post","link":"\/\/www.g005e.com\/2010\/01\/19\/accounting-firm-mergers-what-could-go-wrong\/","title":{"rendered":"accounting firm mergers: what could go wrong?"},"content":{"rendered":"

plenty. the real work starts when the deal is done.<\/strong><\/p>\n

by rick telberg<\/em><\/p>\n

<\/em>as if busy season wasn\u2019t busy enough, many accountants are finding themselves weighed down by the added burdens of integrating a new practice merger or grappling with a new restructuring.<\/p>\n

either way, you may be dealing with change you didn\u2019t expect. and yet, the post-merger or post-restructuring period will determine your and your new organization\u2019s ultimate success or failure.<\/p>\n

\u201cintegration is the hardest part of doing a merger,\u201d according to dom esposito, chief operating officer at j.h. cohn & co., a coast-to-coast super-regional with offices in new york and los angeles.<\/p>\n

and yet, the tempo of mergers among accounting firms seems to be picking up.\u00a0 \u201cmergers are happening at a quicker pace,\u201d confirms glenn friedman, managing partner of the metis group cpas. one explanation: \u201cthe economy has made it so that larger firms need to grow their top lines like never before. and smaller firms need economies of scale in things like technology, overhead and specialized experience.\u201d in the last five years, metis has doubled in size, mostly through mergers. in the next 12 years, according to friedman\u2019s estimates, 75 percent of all cpas will become eligible for\u00a0retirement.<\/p>\n

through 2009, rf resources tracked 27 new york metro area deals, the same as the year before, and just shy of the 2007 peak \u2014 and all the 2009 deals have yet to be reported, so there\u2019s probably more to surface.<\/p>\n

ted felix knows what it\u2019s like to live and thrive through an upstream merger.\u00a0 after about 40 years in business, he guided the merger of his firm, lazar levine & felix, into a deal with what is now parente beard.<\/p>\n

but felix wasn\u2019t expecting to be acquired. \u201cthe opportunity came to use as we were looking to buy,\u201d he says. \u201cat first, no, we weren\u2019t considering merging up. then someone said, well, what if \u2026 ?\u201d and last year at about this time, lazar levine & felix\u2019s staff of 100 joined the then 550-person parente randolph. since then parente has merged with beard miller to create a new york-to-philadelphia regional powerhouse of 1,250 people.<\/p>\n

friedman has heard felix\u2019s story before. \u201ceverybody starts out thinking they\u2019re a buyer,\u201d he says. \u201cthere\u2019s no shortage of buyers. but brokers don\u2019t need any more buyers. they\u2019re looking for sellers.\u201d<\/p>\n

\u201cit can\u2019t be an \u2018us-versus-them\u2019 atmosphere,\u201d cautions esposito. \u201cmany firms are good at getting the paperwork done, but not really good at making things happen after that.\u201d that\u2019s why, at jh cohn, they create a kind of swat team to manage the integration.<\/p>\n

an elite crew of partners and staff are paired with counterparts at the incoming firm to both mentor the newbies and glean new best practices that can be spread throughout the new firm. \u201cthey\u2019re making sure that, in the process of merging, everybody understands that we\u2019re all building a bigger, better team together with everyone contributing.\u201d you can\u2019t rush the process, esposito says. \u201cit takes about two years.\u201d<\/p>\n

but the biggest obstacle for most sellers is that they understand, perhaps all too well, that their staff, systems and processes may not be up to snuff. for the buy-side firm, that may represent opportunity to fatten margin. for the sell-side firm, that could mean painful changes \u201ctheir biggest fear,\u201d felix says, \u201cis that they know they aren\u2019t doing things right. and now they\u2019ll have to embrace things like timesheets and going paperless, whether they like it or not.\u201d<\/p>\n

\u201cthe hardest thing for most sellers is giving up control, \u201c says friedman. after all, they started their own practices because they wanted to work for themselves and no one else. \u201cbut after the merger, they come in, sit at their desk and ask themselves: i\u2019m a managing partner, but now what do i\u00a0do?\u201d<\/p>\n

if you start now, by upgrading your people, plans and processes to the state-of-the-art, you may never need to ask, \u201cwhat do i do now?\u201d well, until you\u2019re sipping a daiquiri on a sunny beach somewhere.<\/p>\n

copyright 2009 aicpa.<\/h6>\n