The Curator offers this to-the-point content from Joseph Tarasco, President of Accountants Advisory Group, LLC:
What made your firm successful in the past may not be what will make the firm successful in the future.
The accounting profession is consolidating at a rapid pace, and it appears that this trend will continue for the foreseeable future. Many large firms have created infrastructure and support systems that allow them to run their practices like a corporate business, providing comprehensive resources for smaller firms merging into them.
Some of the corporate-like benefits include comprehensive marketing and public relations, HR Departments with Staff Career Development Programs, state of the art technology and support, administrative personnel in all areas, and established brands and niches.
If your firm fits into a few of the categories below, you should consider having a merger discussion with a larger firm that has established resources that are necessary to compete effectively in the future.
• Difficulty in attracting and retaining quality professionals
• Little or no succession plan for the partners
• Significant current and unfunded partner retirement liabilities
• Inability to improve the profitability and quality of the client base
• Revenue growth is primarily through increased rates
• Ineffective marketing plans, lack of business development partners, and no in-house full-time marketing professional
• Little or no career development programs for the staff and no full- or part-time HR professional
• Weak leadership and no adherence to a strategic plan
• Inability to raise partner and staff billing rates due to client resistance
• Loss of quality clients due to the lack of quality professionals or niche/industry expertise
• Primarily a generalist firm and the absence of high demand niches and specialty services
• Minimal partner accountability for performance and profitability
The question that most firms struggle with is do the benefits of merger outweigh the downside of compromising lifestyles, culture, and independence. One way to answer this question is to meet with larger firms who have successfully proven to provide added value to firms they have merged with in the past several years in order to make an informed decision.
Having informative types of discussions with quality merger candidates is not a sign of weakness or failure, but a prudent business decision for your partners, staff, and clients.
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